Couple of calls to/from my wifes watch. We tested this, and the delay wasn't bad at all for us. You could hear her talk, then hear it come from the phone. I'd say maybe 150-200 ms latency, nothing out of the ordinary.
Sound from the watch microphone was great. Sounded very clear. The watch speaker was fine indoors. May be a bit weak out doors, but nothing you can't compensate for.
My wife is always doing stuff in the garden and house, and doesn't carry her phone. Had the watch today, and she loved getting calls and texts on her wrist without carrying the phone. Range was a good 30-40' from the phone, which covers most of our property.
All-in-all, very pleased with the watch. I never saw this as a phone replacement. If we got a watch + fitness functions that would be fine. The connectivity and notifications from the phone are a very nice addition, indeed.