What impressed me most about this little device is that it captured 13% of the camcorder market last year. I had also recently purchased a Canon SD750 point-and-shoot camera and was heading out to the west coast so I thought it would be a good time to give these two a bit of a run.
The flip I must admit is a great little device. Video quality is decent for it's size and it is durable. I even managed to drop it and have it roll under the car without a scratch or problem. It is small, handy and quick to pull out and shoot a few seconds. Though my favorite piece of convenience is the built in USB plug. No worrying about adapters or wires - simply plug it into your computer and go.
To be realistic, the flip is not designed to replace your HD camcorder so don't think about capturing a wedding video with it. Though it was a blast for the kids at a recent wedding to capture some funny dance floor antics. The intention is a quick point, shoot and share approach, whether you email or post to YouTube or Flickr.
Now the reason that I mentioned the Canon SD750 above is because these simple little cameras have come a long way in the last few years and have dramatically dropped in price. The SD750 with a 2GB card is only about $50 more than the flip, so for the price point I think they are a worthwhile mention.
The Canon SD750 while able to take decent still pictures at 7+ megapixels (not sure what the need is for 10 megapixels yet for a point and shoot), they have improved dramatically in their ability to capture short video. With a decent and inexpensive memory card (2GB to 4GB) you can capture an easy hour of video which is similar to the flip. Video quality is comparable though you get a much nicer screen on the Canon.
Point and shoot digital cameras have been quite successful for their simplicity and for the same reason the flip will and has been quite successful. For my purposes for quick video shots I still prefer the flip for it's durability and is a great family device particularly if kids are to be using it. For example, it took 15 minutes for the kids to drop the Canon and snap the lens cover off (3 weeks to get repaired).
So in all, the flip is a great complimentary device to your P&S, SLR, and HD Camcorder if you set the right expectations for it.