I'm a convert!

Overview
I've used Palm-based organizers for about 4 years now -- mostly Sony Clies. Since Sony pulled out of the US PDA market, and Sprint is now offering a fixed-price unlimited data plan with its Treo 650 phones, I upgraded both my Sony PDA and "normal" Sprint phone into the single Treo 650 (Sprint service). Although I was a bit leery beforehand, the Treo 650 has really impressed me as a better phone than my old Samsung flip, and at least as good a PDA as my old Sony.

Phone Function
I had expected that phone functionality and sound quality would suffer on a combo unit like this, but I was very wrong! Sound & reception quality are good in both "normal" and headset use, and the extra speaker on the back is great for speakerphone use, ring tones/alarms, etc. An unexpected added bonus is that the use of a replaceable lithium battery means that talk and standby times are 3-5x longer on a single charge than for my old phone! Just in its phone aspects, the Treo 650 is better than my old Samsung flip phone.
In addition, the Palm address book is well-integrated into the phone software, and has nice convenience features like 1-step addition of an incoming call phone number to the address book.

Palm OS Function
The version 5 Palm OS works well and quickly on the fast built-in processor; my various Palm programs seem to work fine, and the display is excellent indoors and even acceptable outdoors. Although the amount of free built-in memory is under 30MB, the SD flash memory slot on top takes at least 1GB cards (and 2GB cards, too, from what I've read). I got my 1GB card for about $80; currently, I've got 700MB of that filled with 2 hour-long TV shows (using the free TCPMP player for .avi files); another 150MB or so has other data, leaving over 100MB free. In the future, it may be more convenient to just buy 3 or 4 256MB or 512MB cards exclusively for video use and swap them in as desired (make sure your case has at least a couple of SD card storage pouches).

Wireless Data Function
However, it's the added wireless data service that really makes the Palm half of the Treo shine! One app that quickly became essential is SeaTraffic, a free app from pdatraffic.com that uses the Treo 650's data link to download the WA state DOT extensive Puget Sound area highway traffic status. No need to spend $100 & monthly subscription on a separate device, just a few clicks and you know if you should try crossing one of the bridges or brave I5/405.
Similarly, weather forecasts, news, even address mapping info is now easily available in your pocket -- no more cursing the mapquest printout forgotten at home! There's even a decent mini web browser. The only thing to note here is that Sprint's current data only works at "dial-up" speeds of 50-100k; their broadband-speed service (& devices) won't be available for another year or two. So, no massive downloads/uploads or streaming video yet (this is why I didn't rate the Treo 650 as a 10!).
Email downloading/uploading using the included VersaMail app seems to work fine. You can specify that email be downloaded only manually or periodically in the background, set up multiple email accounts, work with attachments, etc. As with the web browsing, the limited screen size of a PDA means that viewing/writing long documents can be a bit cumbersome, but the choice of font sizes and what header info to display helps make efficient use of the 320x320 screen.

Stay Updated!
Note that since the Treo 650 came out less than a year ago, there have been a number of software fixes; be sure your phone has the most recent update. On the Sprint phones at least, recent updates (through June 2005) have solved Bluetooth wireless headset volume problems, greatly reduced a memory problem, improved the email program, and added the ability to use the Treo 650 as a Bluetooth wireless modem for your PC.

Keyboard & Protection
Although it looks tiny, the keyboard actually works quite well as a "two-thumb" keyboard. You can buy an external full-sized keyboard if you want, but that's probably overkill for a device like this.
Finally, although the Treo has a good keylock mode, I feel that a case with a rigid front is essential to protect the screen and keyboard in the pocket (or even briefcase/backpack). Fortunately, there are many nice cases out there. The one I chose is the excellent Piel Frama "flip front" leather case. It has a hard plastic insert in the front protective flap that secures easily with a magnetic clasp. Unflip the front, and the screen & keyboard are available; there's even a mesh-covered opening for the rear speaker so you can hear ringtones, alarms, etc. If you shop around, you can get it for less than $40.

Shopping Advice
More advice on buying a Treo 650: since the phone/data aspect of the Treo is so important, shop around! I would stay away from any plan that does *not* include unlimited data; each email download, traffic check, or local map may only take 5k or 10k, but it's amazing how quickly they all add up during a month! Also note that the coverage for the wireless data features is usually less than the coverage for voice. Don't forget to check out non-traditional providers like Earthlink!
Be on the lookout for various "freebie" offers; for a while, Palm was offering free SD cards; in the last month, Palm was offering a free Bluetooth wireless headset; both are excellent addons that would be helpful to most users.
Finally, you may be able to save 1/2 the MSRP price by getting a new-service rebate or by buying a "customer-returned" phone. The latter are "open-box" phones, but come with the same warranty and accessories as new phones. I saved $300 through this route.

Update - July '05
Still very happy with my Treo! I've used it for a month now. Stability is rock solid; the only time the phone has reset are the few times when I installed software that required a reset. The free TCPMP media player is an awesome application -- I urge everyone to download it for their Treo. So far I've only used it to playback videos (such as the UK version of BBC's "Top Gear"), but sound and video performance are excellent on those.
The built-in camera does a reasonable job of daytime picture-taking. I've found that I've started to take a fair number of pictures with the Treo just because I always have it with me. With the unlimited data plan and the integration of the Palm software with the picture functions, it's almost trivial to mail off a photo or two with a quick caption (note that the pictures are fine for web/screen viewing, but their resolution means they don't enlarge well and even 4x6 prints will be adequate at best).
The Palm Piel Frama leather case has done a great job of protecting it in my pocket, even with keys & pen all jumbled in together; the case and the keylock mode have prevented any unwanted activations/phone calls. So far, I haven't received the free Palm Bluetooth headset, but mail-ins often take 6-8 weeks.
Finally, I strongly recommend buying multiple 512MB/1GB SD cards. Besides being handy for video/photo/whatever storage, they're great for backing up your main memory while still leaving plenty of room for other data on the card. Even though the Treo's main memory is non-volatile, I'm still paranoid (thieves are out there!), and like to have a recent full backup or two around the house separate from the Treo.