I've been using the free version for a week. My initial impressions:

The awesome:

• It feels a lot like iTunes, except you don't have to pay for anything. This is sounds boring, but it's actually amazing.
• The catalog is really deep. Lots of both indie and major label music.
• It's got a Pandora-like "radio station" option, in case you like that (I do).
• The ads are not nearly as annoying as I expected.

The not-so-awesome:

• There's no web component. If you want to listen at work, or on a friend's computer, you have to download the Spotify player and install it there. Gack. Likewise, if you want to share a track with your friends, they must have Spotify to listen. Double gack.
• The ads are still annoying, especially in the wrong context. I don't want to hear a clip from the latest Pitbull track in the middle of listening to R.E.M.
• Tons of missing artwork and info, especially for indie music. I swear there's a business opportunity here to compete with AllMusic and Gracenote by actually doing the work they fail to do.

You also still can't find The Beatles, Zeppelin or Pink Floyd. They (the copyright owners and publishers) want you to buy that stuff.

Are you using it? How do you like it?