[IanW]

No, it won't replace an actual mouse. In fact, it is used in conjunction with a traditional mouse.
Personally, I had the chance to take a 10 week test drive with one, and ended up liking it enough to purchase one myself. However, I would say that it depends on what software package you use. I prefer to navigate in Autodesk Inventor with a 3D mouse, as I think their orbiting is terrible. In SolidWorks on the other hand, it is much easier to precisely orbit (position the view at the desired angle) using only the middle mouse button.
Ultimately, I would suggest trying to find an opportunity to run one through a one week test drive. As I'm sure you can tell, preference really varies from person to person.