Conclusion - Pros
Superb resolution, good per-pixel sharpness (especially in raw files)
Good tonal response and dynamic range
Trademark Canon CMOS noise free images, remain detailed even at high sensitivities
Optional high ISO NR removes all chroma noise
Viewfinder bigger and brighter than predecessors
New features (live view, spot metering, MyMenu, Highlight Tone Priority, 14-bit raw) lift it above the typical 'entry level' and move closer to 40D territory
Improved continuous shooting, 3.5 fps and better buffering
Feels very fast and responsive in use
Good battery life
Compact, sharp stabilized kit lens (though it can't match the sensor's superb resolving capabilities)
ISO indication in viewfinder (finally!)
Lots of external controls including new ISO button give instant access to commonly changed functions
Contrast-detect focus in live view (though see cons, below)
Bright, clear 3.0-inch screen and clear, logical menu system
Conclusion - Cons
Average automatic white balance performance, still very poor under incandescent light
Limited exposure compensation range (+/- 2.0 EV)
Contrast detect AF so slow it's useless for most types of photography
Metering has tendency to overexpose in very bright, contrasty conditions
Default JPEG output may be a little 'over processed' for some tastes (raw far more flexible)
Flash must be up for AF assist lamp (although AF is good even in low light)
Automatic AF point selection unpredictable (use center AF, it's safer)
Occasional total focus failures (in our case only 5 or 6 shots in almost 2000)
New Auto Lighting Optimizer doesn't really seem to do anything
No mass storage USB support
A little pricey