I have been using Office365 for about a month now. I migrated from Google Apps and here are my thoughts about it so far.

What I like:

1. Outlook Web Access: Such a refreshing change from the dull gmail interface. It is not only better-looking but it performs way better than the sluggish gmail. Navigating around the interface is better (although for keyboard-navigation fanatics, gmail may seem better, I am not one of those) and Outlook Web Access seems way more like a desktop client that gmail does.
2. Real exchange access via Outlook: No IMAP, no nonsense. Pure Exchange connectivity from Outlook. Makes backing up emails to local disk easy. No folders to set up, no headers vs entire emails to choose.
3. SharePoint: Getting full SharePoint access included in the plan is simply awesome. I am not using Office365 for any kind of business, but I see myself using SharePoint for document management and for intranet-type features (private blogs, wiki-style journaling, etc.) and maybe even photo management?
4. Lync: I have not used it extensively yet, but the idea of having not only IM and video chatting but also online meetings with anyone, included in the plan, is a huge plus in favor of Office 365.
5. Mailbox size: With Office 365, I get 25GB mailbox compared to ~7.5GB with Google Apps gmail. I have a mailbox of about 5GB, so I am glad about this quadrupling of my mailbox capacity.
6. Forums/Support: Forums were sparse and traffic was light earlier. But as more and more beta invites have gone out, I have seen participation increase and I like that a lot of Microsoft folks are active on the forums there and are helpful. This unlike anything Google can boast of.
7. Works awesome with my Windows Phone 7 (and would be the same on iPhone or Android, or any mobile device that supports Exchange ActiveSync): I had a problem with gmail where if I deleted an email on my phone, it would only be archived on gmail and not deleted. Not so the case here.

Of course, not all is rosy. This is a beta, and there are many things that need to be fixed. Some of the things that I don’t like (or am extremely annoyed about):

1. The biggest annoyance has been some issue with hosting engineering which disables my access to adminstration of the account as well as individual user. This has been going on for a week and I don’t have an ETA from Microsoft about when it will be fixed.
2. The lack of organized FAQ’s, especially at the beginning of the process. I could not find the articles I had stumbled upon just before signup (and those were very useful and relevant to my situation). A lot of the help articles linked out to outlook.com instead of office365.com or microsoft.com which added to the confusion.
3. Lack of step-by-step instructions for adding a domain and setting up accounts. I am not an Exchange administrator so after I signed up with the default user, I was expecting some step-by-step guide to tell me what I should do and in what order. There wasn’t. The help was all there, just not organized well. Update: Per Allen in the comments, Microsoft has made available a YouTube video for this exact issue. I thank them for this and I am sure it is going to help a lot of folks in my situation:
4. Some efficiencies of gmail would be welcome here. For example, when I have to move some email to folder (applying a label in gmail), I can start typing the name of the label and it would pop up the names matching the letters. In Outlook Web App, I can only drag-and-drop or select from recently used folders.
5. Forwarded emails seem to attach winmail.dat files when opened in gmail. I am not sure if this is an Outlook issue or an Exchange issue or both, but if I forward an email as an attachment (vs inline), the attachment is interpreted as a winmail.dat file by gmail.
6. My email migration was not so successful. It completed very fast (about 10-12 hours for about 3.5GB) but a lot of older emails did not make it. Now, supposedly, there could be issues with those old emails because even in gmail, I had actually copied those emails via Outlook from the older email program. So I may have lost the message ID along the way and that would make it difficult/impossible to import. Also, related, Gmail has an All Mail folder which essentially duplicates all the emails in the various “folders” (labels). So after migration, there may be a lot of de-duping involved. I am not there yet. Calendar and Contacts had to be imported separately (not supported in IMAP migration method). Both went off smoothly and without any issues.

I have not talked about Office Web Apps (included for free) and of course, the possibility of going with a plan which offers Office 2010 a a subscription download (implying, you can free upgrades when the next version of Office is released). And, I have also not mentioned that this is a financially-backed 99.9% uptime guaranteed product!

I think Office365 is a fantastic bundle of software delivered as a service. Sign up at http://office365.com and try it yourself. If you signed up in the past, you should have already received email about the acceptance into the beta program. If you sign up now, there is a 2-4 week waiting period.

I was not sure about my transition from Google Apps to Exchange but that has been almost flawless. Add SharePoint and Lync and I think this is something huge from Microsoft and kudos to them for creating this bundle. I love it!