Bought this as a replacement for a Dell Streak (much bigger screen, but far less reliable). After a month of heavy use, I am delighted with this. The combination of Sony hardware and Android 2.3 means that this is a real delight to use.
The slide-out keyboard is a joy to work on, particularly since the predictive text is incredibly good - normally the word you are typing, even if obscure, comes up within 3 or 4 keystrokes, and it learns your most common choices very quickly. The on-screen keyboards are also pretty good, if sliding out is too much for you.
The touch screen is precise and false touches are rare. The processor can handle some pretty exacting tasks. Video calls on Skype (which were way too much for the Streak) run without a hitch, as do the apps for the Economist (a bit of a pause before it loads the audio, but otherwise fine), various newspapers and Amazon's Kindle. Text is easy to read, although the size of the screen means a lot of page turning. However, I am using it at the moment as a combined newspaper, book and email device without noticeable eyestrain.
The only downside (and the reason why it's only four stars) is that battery life with the kind of usage I give it is not very impressive - it tends not to last a full working day, so carrying a charger (Sony's is nice and compact) is essential. However, spare batteries and chargers are easy and cheap to buy. I also have had some problems with QuickOffice Pro, which has frozen on me a couple of times without saving my work.
Memo to Sony - a 5" or 7" version of this would be my ideal machine, particularly if packaged with a really good Office app.