The lens has eight aperture blades, a decent amount, so the bokeh is pretty nice.
Granted, it's widest aperture is only f4.
There is a bit of flare visible here, (OK, lets be honest, a lot of flare) but I am pointing it directly into the setting sun, which is a pretty stupid thing to do. Even so, its not that bad. I've had worse flare from other lenses in much better conditions.
The Negatives
Not as fast as one expects from USM
This USM lens isn't nearly as fast to focus or quick to acquire targets as some of the other lenses in the USM line. Even my venerable 35-135mm is faster out of the gate than this one. It has "micro USM" rather than "ring USM"; which is technospeak for "it isn't as fast as other USM lenses, but it costs a lot so we are going to slap the USM label on it. Perhaps that isn't fair. After alll, its still better than the kit lens, or the 50mm f1.8 mark II. As I tend to shoot street rather than "action" this isn't much of a problem for me. For sports or cycling fans it could be irritating.
Weight and Length
This is a heavy lens. It's also long and very noticeable, and tends to cry out "hit my owner over the head and steal me." I can also imagine it bumping into stuff if carried over the shoulder-all the more reason not to get the ET-65B lens hood.
I would much prefer the length of the 70-300 IS Diffractive Optics lens, which is about half as big. As soon as I get that phat job at National Geographic, I'll be sure to buy one. Seriously, the real advantage of the DO seems to be faster USM and shorter barrel length. It is, however, $1300 rather than $550.
Summary
A Great "Bazaar Lens"
Is it a perfect lens? No, but its very, very good. The quality of the glass is nice, the IS system works well, the zoom range is good. And the price is right. For $550 this represents an excellent value; and until I can convince my spouse/CFO to let me spend $1300 in the 70-300 IS DO, or I win the lottery and buy that 28-300 L lens, this will be an important part of my tool bag.
I bought this principally to do people shots in markets and places like the bazaars I like to shoot when I am travelling. With the IS, you can take decent shots of people that are tightly composed, from a distance that is unobtrusive, and still retain a good level of sharpness, even when the light isn't perfect. I've been looking for a "bazaar lens" for some time, and I am pretty sure that this one is it.