There's nothing majorly wrong with Apple's MobileMe service. All of its subsidiary pieces and parts—the email, the syncable calendar and contacts, the photo gallery, the online storage—do fine. So why doesn't it make sense?
Apple has every right to be proud of the fact that it got its act together, and everything that was all herky jerky back in July 2008, when the $99-per-year MobileMe launched, is now working as billed. The push email shows up immediately, if you use your me.com account. Ditto for the push contacts and the push calendar, though you can't use web cals like Google's or Yahoo's if you want to be super synced. The gallery works great; as a dad I upload tons of pictures and videos to the MobileMe gallery right from iPhoto, but with iPhoto '09, I can upload them to my free accounts at Facebook and Flickr too. There's even iDisk, a smoothly integrated 20GB cloud storage service, which now has a public drop box for file sharing, just like YouSendIt. And if you have a time capsule NAS/wireless access point, you can remotely access your disk using mobile me, as well as use back to my mac remote desktop control. (The service tracks the dynamic IPs of all your machines, so each machine can always keep track of the others.)
Maybe you're catching on to the real problem here. It's not just that you "free" junkies who read Gizmodo wouldn't be caught dead paying $100 for anything but a 50" flat-panel TV. It's that the service itself is made up of many pieces you already have. This presents a complicated economic argument: If you already have an online photo gallery and a free or company-given email account that you like and use, why would you pay to have those things twice, just to get contact syncing for your phone and a decent online storage system. Wouldn't you go find a less elegant online storage system for a lot less money, and content yourself with syncing your phone to your computer's address book every couple of days?
I said that the service worked as billed, and it does. My favorite component is the contact syncing, because anytime I add anything on my phone or my computer, the two are instantly in sync. But I'd achieve the same result, with less magic, if I remembered to sync my iPhone every so often.
I did have one problem with contact syncing, but I bring it up mainly to tell how easy it was to fix: I had imported a bunch of contacts from email accounts online, and some contacts got corrupted along the way. I had 18 contacts, out of 250 or so, that wouldn't sync from Mac to iPhone or MobileMe web portal. The fix was easy: Go in and change something about the entry, like adding the person's company name or a fax line, even their kid's name. As soon as you tweak the entry, boom, it gets uploaded.
Most other exchanges in MobileMe have been without incident, even exporting my Google Cals in a big bunch, then manually importing them into iCal from time to time. But the very fact that I use MobileMe for some services and free web apps for others, and the fact that I am in many cases the one making sure everything talks to everything else, underscores the point I'm making, that MobileMe is a confederacy of programs that have nothing to do with each other.
In the end, even after it's working well, it's difficult to recommend for two reasons: The money, which I've sufficiently covered above—a hefty sum when contrasted to free web-based simulacra—and the compatibility, not with your device "ecosystem" but with everybody else. Who uses iCal or Me.com mail? Google wins those battles for sure. Even though I swear by MobileMe Gallery, most people I know prefer Flickr, or just Facebook.
There's a solution. Apple could offer some things for free, and some things cheap. Just bought iLife '09 or a new Mac? Guess what, you get to upload your photos to a MobileMe Gallery. Buying an iPhone? Syncing your contacts and calendar is a $2/month add-on. I think iDisk could easily be a success at $25/year, all by itself, as long capacity goes up each year automatically based on capability. It's not like these component parts have anything to do with one another anyway.
My mother-in-law recently switched to a Mac after eons on a PC. I looked over her shoulder as she was placing the order, and when we came to the part where she could get MobileMe at the low introductory price of $70, she asked me if she should. I thought for a second, and realized the answer was no. I may keep her grandkid's pics on MobileMe Gallery, but she's perfectly happy with Picasa, and there's a beta version of that for the Mac out now. For free. [MobileMe]