It does exactly what it says on the packet.
We have three macs at home now. One is old, runs 10.4, won't run 10.5, and is connected via 802.11b and so can be considered a non-player as far as Time Machine goes. The other two are an Air (we don't have the
lame-o ethernet adaptor) and a MacBook Pro. The aim, with buying a Time Capsule, was fourfold: Get faster and more reliable networking for the two laptops; Replace our repeatedly falling over and
crap router; Make iChat, screen sharing, and all that bumf that uses
NAT-PMP work properly; and free up the disk that we were using as a backup disk to go in the (full) media server.
Now, when the Airport Extreme was released there was much
bitching and whining about the file serving performance and apocryphal tales led me to believe this had been fixed in the latest firmware and/or in Time Capsule. Basically speaking this
is the case. I ran some file copies onto the internal disk and got the following numbers:
* Write, over GigE, 13-14MB/sec
* Read, over GigE, 18-19MB/sec
* Write, over 802.11n, 6-7MB/sec
* Read, over 802.11n, 7-8MB/sec
So nothing spectacular, but certainly not shoddy. The same network gets 23MB/sec from a Linux Samba server (running on an
Epia M10000).

Time Machine: the dreaded "initial backup" took probably around 12 hours from the Air. However, the machine remained usable all the time and once the shock of seeing the progress bar move one pixel every ten minutes or so wears off, it's really not a problem. I did an initial backup of the MBP over GigE and that was much faster, three/four hours or so, and (again) there was no problem using the machine while it was doing it.
The router aspect of it is much like many other Apple products. It has a fairly basic feature set, but that which is there is really easy to set up and works perfectly. The setup integrates nicely with the Air Port Utility (picture left) to create a mini-NOC for, now, our entire network. I was concerned that it wouldn't the ability to set NAT pinholes, but it does, and would appear to be able to build tunnels for more challenging protocols like FTP too. Little touches make the setup the 'next generation' type experience that Apple owners have come to expect .... like IP addresses having the network side of the address greyed out when you go to edit them. I've not actually tested NAT-PMP yet, but am happy assuming that a lot of our iChat file transfer, screen sharing and video conferencing problems will disappear. Stay posted, I guess.
The internal disk can be shared as just a disk, and this led to the only significant disappointment of the whole experience. It works, perfectly, but there's no way of limiting the size of Time Machine backups so it can be assumed they will grow to fill the whole disk and eventually using it as a 'scratch' drive or similar storage will become impossible. This seems a serious omission to me and something that
surely is on some developers todo list somewhere in Apple.
I've not tried hooking either a disk or a printer into the USB port (you can apparently use a hub to do both too) and so can't really comment on it. We will probably be hooking a printer in though, when I get it back from
John :)
So, all in all, a victory. It does everything I hoped it would. My broadband connection no longer falls over; we are still backing up and without having to fiddle with USB cables and the little door thing on the Air; wireless is faster and more reliable; and I have another 250Gig in the server to play with.
Edit: NAT-PMP works fine. It makes iChat work. I don't know if it makes anything else work.