I find that prestige classes aren't nearly as common in my game as they are in milder games with more merciful dms, but that's because I kill off characters like flies in summer (which is to say, the fast ones manage to get away).
I've had a number of prc's, either homebrew or official, come into play as pc choices. The ones I've seen in use as pcs include the assassin, healer, eldritch master, black turtle, cavalier, bone witch, contemplative, psiblade... hm... can't think of any others that have been taken off hand.
I've seen and played lots more pcs shooting for a prc that died without making it or else are still going but haven't made it yet. I've seen people going for tempest, blighter, duelist, dragon priest, pale master, battlemage, war beater, gatecrasher, um... prolly another one or two in there somewhere.
Often a player finds the "perfect" prc long after their character is already mid to high level, and it makes it take a lot longer to qualify (my ranger/rogue is a great example- he was already 12th level when MotW came out and I want to be a tempest, but I still need Weapon Focus, Dodge, Mobility and Spring Attack... yeesh!) Personally, I like prc's because they tend to differentiate between high level characters more.
I tend to think that prc's are decently-balanced, with a few exceptions I don't allow in my game anyhow. I've yet to see them cause problems.
Another thing that's great about them is the potential for interesting villains. What's neater: a 12th-level necromancer or a 6th-level necromancer with a skeletal arm that drains the life right out of you (pale master levels)?