From what I've used of it so far, it's not very good. The interface is downright prehistoric compared to XBMC. Rewind, Fastforward, 30-second skip . . . all that stuff is vastly inferior to XBMC. Worst of all, it doesn't support Samba shares, so it can't even see any of my media. Why any sane person would purport to create a media center but leave out Samba is an utter mystery.
At any rate, I'm in the long and tedious process of converting all my media into stuff the PS3 can read, i.e., fixing file formats that are incompatible and moving everything onto a box that can do DLNA shares so that I can use the PS3 as a media center on my main TV and move the Xbox into the bedroom. It's a PITA. It's capable of HD. Otherwise it is vastly inferior to XBMC in every conceivable way.
Oh yeah, and in addition to PMS degrading quality and sucking at rewind/ffwd, etc., it also means that you have to leave your computer on all the time instead of just streaming from a low-power NAS. Again, PITA. It's better than nothing, but it's a very inelegant solution all around.
And it's worth mentioning again because it's so important: The interface sucks.
edit: I should note that I have hardly used PS3 media center. I am still working out kinks and getting it to simply function. While what I have seen so far does not even begin to make me think it will happen, I am open to being proved wrong about its shortcomings. I would love it, in fact.