I downloaded and am currently using the XM app. I don't think it serves anyone to discuss the merits of XM/Sirius. It is what it is–I happen to love XM in my car not for music (I've got my iPhone for that, connected to my cars audio system), it's for sports, political talk (I think it must have 7 or 8 political talk shows), NPR, ESPN, and live sports (baseball and hockey).
That being said, here are some good points and bad points of the iPhone XM app.
Good
1. You can listen to a song, and then go right to iTunes store to get it. It is kind of fun.
2. There are 90-100 music and talk channels. It is entertaining on run, sitting in the office, or other places.
3. It works really well. Very nicely developed app.
4. With the subscription, I listen to XM on my Mac using the Pulsar radio player from Amoeba Software, although the XM Mac radio player works well, but seems a bit of an afterthought in design.
5. The 128Kbps streaming sounds a lot better than I imagined. It's better than FM, the old 32 and 64 Kbps streaming that XM used to have.
Bad
1. Yes it costs money. But I have 5 XM subscriptions, and having this app is going to eliminate 2 of those subscriptions, so I'm going to be way ahead. Once again, $2.95 for the music might be too much (that's why we have iPhones with an iPod functionality), but that's an individual decision. I'm paying $2.95 for political talk, ESPN, BBC Radio, MLB talk and NHL talk. I'm happy with that.
2. Remember, this isn't a replacement for a portable XM or Sirius unit. I sometimes drive out into the country, where there's no cell service (let alone 3G service), and I'm going to lose XM through my iPhone. And if you camp up in the rockies and want XM, you're going to have to have a portable unit.
3. It seems to drain battery life, given that it remains connected to the 3G network constantly. However, I can't be sure, since I just got the 3G S, which has a better life than my old 3G did.
So, I would give a big thumbs up to this app.