After spending a bit more time with this update I'm actually liking it overall.
Mini Player
This is one of the stars of the show as it's now a lot more powerful. I miss the progress bar, but you can now do so much more from just the mini-player, without having to endlessly switch to the full window to do simple tasks.
Search
Part of the reason the new mini-player is so powerful is the new, vastly superior, search. Finally we no longer have to open iTunes up, find the right entry in our sidebar and
then search; it simply searches everywhere, all the time, and gives results useful enough to quickly find what we wanted.
All I need to do now is abandon my old habits for the old search, and relish this new golden age of actually being able to find music without endlessly jumping into, or out of, playlists and albums first
Next Up
A great extension of the old iTunes DJ. I do miss being able to manipulate it like any other playlist, but it doesn't seem to be missing any major features for keeping it stocked with music. My main gripe at the moment is that iTunes doesn't seem to remember what music source you were playing from when close and re-opened, so whenever I open up iTunes I have to go back to the correct playlist and start playing from there; it would be better if iTunes just remembered what you were playing when you last closed it (like iTunes DJ did).
Another small gripe is that you can't seem to go back properly on Next Up, at least when shuffled, as it just chooses a new song instead of pulling one back in from the history list.
Cover Flow
I personally miss cover flow; I was never a huge fan of it as it was on the desktop but I was hoping with the edge-to-edge window that Apple would have made a bigger, better cover flow that took up the whole view, maybe with the ability to simply type to filter the view. Flick through till you find what you want and touch it show the expanded view underneath, or double tap to open the album in more detail with a cover-flow of all available artwork, plus any digital booklet and/or music videos.
Cover flow is a great idea that I wouldn't like to see die as it's one of those stylish interfaces that's good fun for touch users without being
too inefficient (if done right). Plus it's a great way to "lazily" search for music when you're not sure of what you want.
So yeah; while I didn't use cover flow a lot as it was, it still has a ton of potential that I'd like to think Apple could still see realised, rather than simply abandoning it.
Performance
I think a big mention has to go out to performance. Though I'm still a bit mad at the iTunes folks for not addressing this sooner, as every iTunes update was slower and slower, and generally worse than ever at just playing music.
This new version is very responsive, and I haven't had it lock up once. Older versions used to have a lot of trouble, particularly when syncing an iPod (or other iDevice I expect), this new one actually can play music
and manage my music player at the same time!
Complete Package
I'm still not a big fan of the all-in-one nature of iTunes. I'd personally prefer a separate app for syncing/managing iDevices, and simply using the iTunes store in a proper browser like Safari with quick links for jumping between the two. But the package is at least more polished than before, and more functional, without being too complicated.
There's a lot of stuff to get used to that's different; personally I'm a fan of ditching the sidebar in favour of the more specialised horizontal tabs. And with the capabilities of the mini-player I hardly need even those.
One other gripe is that iTunes still only plays fairly specific movie files, which means my heap of quicktime friendly TV shows and movies remain unmanaged even though I'd personally like to have everything in iTunes. It's in Apple's best interests to make sure people import everything into iTunes, even stuff from other sources, as no-one in their right mind is going to re-buy a TV show just because iTunes won't play it, but they might be encouraged to buy Season 2 of the same show via iTunes if that's where they're keeping Season 1, for example.
There's also no easy way to repair split albums that have incorrect album artists; aside from making it again easier for people to manage music they've acquired from multiple sources, gracenote and even iTunes store purchases aren't always correctly tagged, resulting in multiple albums. I'm hoping in future there will be an easier way to just select a split album and combine them together automatically, with suggestions on which metadata to correct in order to do so.
Conclusion
Bit of a massive post, but yeah, I'm generally positive about the update as it's much faster both in performance and ease of use. Lots of stuff to like about it, and nothing that stands out as a big issue to count against it.