Having just set up a media centre PC in my living room, I was excited by the prospect of this mouse. It didn't live up to expectations, and has been returned for a refund.
The concept is great, but like another reviewer here, I experienced some major reliability problems. Personally, I think it's to do with the range, which doesn't appear to be anywhere near what's advertised.
The PC is in the corner of a fairly large living room and if you're sitting cross legged on the floor in front of it, the Air Mouse cursor moves around the screen reasonably well, but move back to the sofa (around 3 meters away) and the cursor begins to stick, jump around or disappear altogether. It's almost impossible to control the cursor properly from the sofa (the advertised operating range is 30 feet (4.57 meters)).
There were also several issues with the gesture volume control. Again, this is a good concept, but in practice it was too frustrating to use. Firstly, the SetPoint software stopped it from working because it fails to recognise the default sound device (see the Logitech forums). The simple workaround for this is to disable all the other sound devices bar the default one, which is fine for most people, but isn't really satisfactory for such an expensive mouse. Even when it was up and running, however, it was still too erratic to use. The idea is that you hold the volume key down while moving your hand left or right to turn the volume up or down. On some occasions the volume would move from max to min in one small flick of the wrist, on others it would only move in tiny fractions even with great big swings of the arm, which makes changing the volume look like you're losing a tough game of Wii tennis.
It's not unusable, but for the price, it's nowhere near good enough.
Anyway, in researching alternatives (the gyration mouse seems to solve the range issues, but is even more expensive), I found an iphone app that controls the cursor absolutely flawlessly and provides tonnes of added functionality that practically removes the need for a keyboard and mouse altogether. And because it connects to the WiFi network, there are no range issues.