Unfortunately it's browser is unusable, in my opinion. Until someone ports webkit or gecko to WP7, I'm staying away. And then only if it allows you to change the browser default.
But as a web dev, I agree that there's something deep set within me that makes me uncomfortable about using IE for day to day browsing. I'm not even sure what MS can do about that.
The initial version of (pre Mango) of mobile internet explorer was pretty poor (though I wouldn't call it unusable) but the Mango update comes with IE9 and it is quite good.
Edit: Still can't set any other browser as default however.
It has by far the worst html5 compatibility of any mobile browser: http://mobilehtml5.org/
I think WP7 is pretty slick, but the browser is the most important app on a phone and IE is a deal-breaker to me.