There are many things I really like about Mendeley. I really like reading papers in it, since I can save notes about the paper that I can search and share if so desired. Searching inside pdf files also works very well, and it is much, much easier for me to use Mendeley than to try to remember which paper I was thinking of and then open it in Adobe Reader. I never really got into Endnote's pdf features--the pdf search and import features were buggy and irritating when first introduced, so I never got into the habit of using them.
The pdf import feature in Mendeley works very well for me. I was able to convert over most of my library directly from my pdf files. This also works well with my new literature review system. Now that I am trying to use RSS to keep up, it is very easy for me to download pdfs into a directory that Mendeley watches. I also use Web of Science for searches and download pdfs through there. This is a huge improvement from my old system of exporting Endnote data, then importing the reference, since bibliographic imports happen automagically. Correcting errors in imported files is really easy, and can be done manually or via Google Scholar search. I spent a bunch of time initially correcting entries, but now I don't really have to. There is a pretty decent time investment in importing hundreds of pdf files at once, especially if you want to be able to properly search by author (since the author names MUST be imported properly for this to work). I did not try importing my Endnote library, but that is another option.
There are a few downsides I've found to Mendeley. I find the cite while you write interface a little clunky. It is not unusably so, and it is really easy to find the paper I want to cite using Mendeley's search functions. I thought the same about Endnote's interface, so this wasn't a major downgrade for me. One minor quibble--it is not possible to do unrestricted edits in the bibliography generated by Mendeley. This is something I have only just started playing with, so I am not sure what exactly I did to cause Mendeley to complain about it.
One big issue I discovered is that Mendeley and Endnote DID NOT play well together in one document I was working with. The references got corrupted and I had to strip out all the references and redo it all using just Endnote (since that is what my collaborator uses), which was really annoying. This is hopefully just a minor glitch for me, but may become a problem when I am writing with collaborators who still use Endnote. I haven't had this problem in some of my own documents (updating old proposals, for example). I plan to avoid on using two reference management systems in the same document as much as possible, but be careful if you do!
Mendeley was very disappointing in one area, and that is in keeping a library synced between two computers. I used to use a laptop and a desktop, and I tried to use Mendeley to sync my library between them, but this caused me lots of grief. I had lots of duplicates in my library, and Mendeley sometimes lost track of where the pdf files were on my laptop. I have solved this problem for myself by switching to using one computer (a laptop with a dock), but this seems like a feature in Mendeley that needs a lot of work, but could be very useful.
I don't really use the online features of Mendeley much, but in theory, you can grab citations while surfing and also have access to pdfs through the Web interface. I am not sure how well this works, since I always download pdfs when I want to cite and/or read something, but this is something that might be useful to people who use Google Scholar for searching and/or don't always work on the computer where their pdf library resides.
In short, I am keeping Mendeley. That it is free is only icing on the cake!
UPDATE: Thoughts on the latest update here.