Java applets leave an antiquated impression with most, mainly because people still conjure up memories of applets from 5+ years ago. Painfully slow, buggy, overused.

The reality though is that applets are significantly faster now, and they are very powerful. But I doubt this will change the impression most people have of them. Flash does most of what you would need, and now there is AIR if you need access to the file system or other low level functionality.

I think a mistake Sun is making is with all the branding they do with applets. Showing a Java logo each time an applet launches is a shameless plug and leaves an impression that a lot of crap is loading. The bootstrap process should be more seamless, in my opinion. They still have not changed this as far as I know.