It's my primary movie player, whether it be for watching BR-Ds, DVDs (does a better job upscaling than my Mac or Windows Media Center) or AVIs. It doesn't have the same level of file compatibility as the Mac or PC, but its set top box functionality with the remote and ease of use still gives it the edge.
Best overall media center. Only lacks video capture TV capabilities I have with both the Mac and PC.
PS3 games, PS2/PS1 games since those consoles are in storage.
No web browsing, barring the rare exception; low buffer due to memory constraints, lower compatibility with all sites relative to Mac and PC, inability to easily download files, etc. It's just convenient to have, even if it's not so convenient to use without a mouse and keyboard.
Music files are on the HDD, but it's rarely ever used as a stereo since iTunes does a better job managing music and play lists. Will potentially see more use if/once the in-game music player is added to the OS for those games with little or weak music.
Photos are on the HDD as well but iPhoto does a much better job organizing photos with the quick previews and limited editing and output/sharing capabilities.
Also used it quite a bit for Folding@Home with about 420+ data packets processed. I cut back on that since the early PS3s (non 40GB) are serious power hogs.
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