The smaller form factor really shines for reading ebooks, email, and cool feed readers like pulse. It's super responsive for all 2D tasks (reading, movies, games like Angry Birds) and you can hold it in one hand for extended periods unlike the iPad, which gets a little fatiguing after a half-hour or so.
The eMail and gmail apps are great, Dolphin Browser HD and Firefox are good alternatives to the standard browser in Gingerbread, and it Tweets well enough. Youtube app plays well. Flash mobile is... well, it's flash on a mobile device (warts and all). Load all fantastic flash ads on demand!
The processor is sporty (not fast), that is unless/until you root it and overclock it. I've got CPU governor set to "performance" and have it set at 600 MHz minimum and 1.1 GHz max. That said, Angry Birds ad-free plays silky smooth; with ads, it's a slog, but that's with almost any android device I've seen aside from my dual-core, nVidia-powered Atrix 4G phone. The overclocking produces no more heat or detrimental effects that I can perceive, so I believe they underpower the CPU by default.
The Omap SoC has a decent graphics card that can play, for example, Backbreaker Football in 3D without any jitter and few (if any) dropped frames at all. It runs quadrant (synthetic benchmark) at an overall score of 2100+ and a 26.4 fps on neocore.
It's a daily driver for me. The screen is great, it's super portable yet more substantial than a smartphone (especially for reading/surfing), and I've been actually reading more now than ever (split between nook's app and the kindle app).