Well, The Hobbit isn't Lord of the Rings, and that's a good thing. Jackson's LOTR is an abomination deserving only contempt and censure. The very idea of Faramir trying to steal the ring from Frodo!
In any case, it appears that Jackson was able to hire an actor who can credibly portray a hobbit, and who is the right age, to boot. Elijah Wood was far too young for Frodo. The dwarves are differentiated nicely, though there are too many of them for each to have a shining moment. They also got a boost to their stats, apparently, because they kick tail hard just about every fight they get into. In the book, they were often rather useless.
The Bilbo/Gollum scene is nicely handled. The addition of one sentence ("You told me to ask you a question, so there it is.") helped, I think, make Gollum's (initial) acceptance of the last riddle a little more credible; Bilbo was throwing it back onto Gollum for pressuring him.
I didn't mind the over-the-top rock giant scene, nor the over-the-top Radagast the Brown scene. I think it was because I went into the theater expecting cheesy goodness, and got that, plus some really good movie squeezed in there, too. The changes he made to character actions were improvements, I think, unlike in LOTR, where the changes didn't make any sense (Faramir trying to steal the ring from Frodo? Oh, come on!!!).
So, I recommend seeing The Hobbit, and have, for the present, taken Peter Jackson off my "We hates it forever, preciousssss!!!" list.