This product saved us! Thanks Apple!
I bought this product before it was released, and kind of felt queasy when I read some poor reviews. However, my experience with this product has been excellent. It works very well and is part of my mixed wireless/wired home network that has wired and wireless game consoles and a variety of iMacs, MacBooks, an Apple TV, a PSP and Dell PCs. It also has a networked Brother laser printer as well as Slingboxes so that we can watch cable television via the Internet. In other words, you probably will not have a much more complicated home network in your home. The Time Capsule was used to retrieve one accidentally deleted file via the Time Machine application on one of my MacBooks. It worked perfectly.

Then it was put to the test. One of my MacBooks that has been running continuously for almost two years died. The internal drive just failed. The internal drive had pictures, music files, and many other important files. I purchased a new MacBook this past weekend. It was delivered 4 days later. Four hours after delivery, the new MacBook had transferred all of the files from the Time Capsule and my new MacBook was a clone of my recently deceased MacBook. It was as if the crash never happened. This took but one click after turning on the new MacBook. If I could give the Time Capsule 100 stars I would. It is incredible and then some.

Don't Buy Unless You Are An IT Professional!
I am the proud owner of this 5 paperweight. I tried to set up today; converting from a Linksys Wireless Router connected to cable modem. Following the poorly written directions did not result in a connection. I spent an hour on the phone with a distracted support person who got it working. Thirty minutes later it stopped working. Another hour on the phone with support whose answer for everything is a reset and closing and opening the Airport utility, I gave up and tried to revert back to my Linksys router. Now the Mac won't recognize that anymore either. So, not only did the Time Capsule fail to work as advertised, it poisoned my connection with my old wireless router. If you are not an IT Pro who can troubleshoot complex things yourself, don't buy this because it doesn't talk to Macs very well and the support people are not helpful. I will now be checking what my return options are.

BEWARE - Timecapsule is worse than no backup at all!
The problem with using a Timecapsule is that it provides you a great--but FALSE--sense of security. I had one for months and it always seemed to be working great, backing up my data every hour. Then it began to fail, unable to connect with my computer. The problem is that Apple techs really have no understanding of this product themselves--it's the ultimate black box--no one knows really what its doing or how long it should take. Tech support will tell you to wait for hours and try backing up again, but if Time Machine doesn't "fix itself", they only have one solution: reset the time machine, which means ERASE all your data. Apparently this happens quite frequently. So all along you have been operating with a false sense of security, which may have kept you from making smaller, reliable backups onto hard disks. This product is therefore really a menace, worse in many ways than not backing up at all!!

A Frustration Exercise
Can never get the laptops to backup to TC...yes it will work as a g compatible router, but if the laptops decide to sleep they can no longer find or back up to the time capsule. It is a total waste of money and time...

Lifesaver
After five years of working exclusively on Mac laptops and never once backing up, this product arrived to silently inform me that I was out of excuses for this irresponsible lifestyle!

I bought the 1TB version and did have some issues getting it going (absurdly long "preparing backup" times) and returned it for a much more compliant unit. Finally got a full backup (took 20 hours wirelessly) and several incrementals done----and a week later, my Macbook crashed completely! Received a replacement computer, and was able to restore everything from my TC backups, effortlessly and perfectly (took 3 hours via ethernet). In fact Time Machine recreated my previous work environment so precisely it was almost creepy! If it wasn't for TC my career---and to some degree my life---would be a shambles right now.

Sad truth: Laptops fail, even Apple ones. Happy truth: Time Capsule can save your bacon. As the other reviewers have said, just do it. You're out of excuses not to.