From my experience everything is preserved except lyrics.
That's a bummer, and probably a dealbreaker for me. Hopefully they'll add that and work out the bugs.
The general ability to sync doesn't go away, just the option to sync Music. Apps, Info, Photos, etc will still sync over USB/WiFi (depending on which you choose) but if you're using iTunes Match, the ability to sync Music from the iTunes program is disabled completely (based on what beta users have mentioned in this thread).
It sounds like you haven't used Match, or have you had firsthand experience with it?
Disabled how? Since the other things still sync I assume the SYNC button is still there and functional. Does that mean that when the device is synced it doesn't update what music is on the device?
I mostly use smart playlists with criteria based on date. With Match enabled I assume the playlists will update on the fly, but when new songs get into the playlist does the remote device load those songs automatically? And if so, right away? When the device is synced? Or does it just update the playlists with "ghost" versions of the songs and the user has to manually tell it to download those files? It seems bizarre that it wouldn't grab the files even when it's hooked up to a USB connection or synced over wifi.
With Match, do devices even show the window for selecting which playlists are synced? Or since all playlists appear on the device, does the choice of which playlists have files loaded have to be done manually on the device? It seems like even if all playlists are visible (but some don't have the files), the user should still be able to select which playlists actually download the files to the device (and in the case of smart playlists, have those playlists get updated automatically like they always have). Is that not the case?
The notion of preparing your on-the-road library before you leave a wifi hotspot is simply to avoid using 3G data. If you listen to the same songs every day, then you only have to download once and that's it, but if you have thousands of songs (I have over 10,000) it is very likely that I never hear the same song more than a few times a month on the road. It would require foresight to prepare a playlist before you leave a WiFi hotspot (home/work/coffee shop/etc) and download them. Any song on a playlist that isn't already on the device would be skipped. So either you download the entire playlist before you hit the road, or you download each song manually before it comes up next in the playlist.
So... what benefit does iTunes Match offer in that situation? The ability to manage your device's library from anywhere rather than just your main iTunes library? True. But then it should be recommended to manage on a WiFi network to avoid 3G charges. And if you really only go to and from work every day, with maybe a 2 minute stop at a coffee shop, you're better off managing your playlists before you hit the road, which mean you're probably better off just syncing with your library rather than download from Match.
I see two benefits. One, when you have whatever songs loaded but on the road you decide you want to hear something that's not loaded you can just grab those songs or albums. If it's just a couple songs here or there doing it on 3G wouldn't be that big a deal.
The second is similar to my listening habits. Instead of loading up 10k songs in playlists on your device, create smart playlists that include a smaller number of those songs (I tend to do it based on date of last play although other things like play count would work as well). Load up the playlists before you go, travel/listen for a while, then when you hit a wifi hotspot it syncs your smart playlists and you tell it to download the files in those playlists.
So say you have a smart playlist that takes 1000 songs of your 10k. You're on the road listening and eventually hit a wifi hotspot after you've heard 900 of them. You sync up at the hotspot and your iPhone replaces those 900 songs with other ones chosen from the pool of 10k. You're saving a lot of space on your device, you're still able to hear many songs from your library, and you don't have to worry about manually choosing or creating new playlists every time you get to a hotspot. Obviously any cloud based system is going to have a bigger advantage to people who spend longer time away from home than people who just go back and forth to work every day - any service like this isn't going to be useful to everyone, some people will get a huge benefit from it while others have no need for it.