I’ve been using the service for about two weeks now (but I’ve only posted to once so far, to my detriment). My reaction is split down the middle, as I stated in my lone post at jasonclarke.wordpress.com:
1. The blogging interface in hosted WordPress is vastly improved, while looking quite similar (and that’s outstanding from a usability standpoint). Especially appreciated are two key features: the “add category” functionality and the “upload/add images” function.
2. Alternately, two major drawbacks made the WordPress hosted service largely undesirable for me. One was the inability to edit your templates- even font faces and sizes were blocked. The other was the inability to map a domain to the service.
Unfortunately, neither of my major cons have been addressed with the WordPress public launch. But I know that offering customziable templates has to be on their horizon; it’s only a matter of time. One major advtange of the service that I failed to mention in my initial review: the comment spam blocking seems to be around 1 million times better than it is for me on my installed version of WordPress.