What do you like about it? What do you hate?
Love: The ease to learn and run the system.
Hate: Nothing really, although I kind of dislike that Power and Education is so important at character creation. Power decides how much Sanity you have, and Education how many skill points.
How smoothly does it play?
Very smoothly. Due to it's simplicity (and lethality) combat is quick, as well as skill resolution. This leaves a lot of time for role playing.
Is it difficult for a gamemaster to prepare for?
Not really. Just make sure you have your handouts prepared, and also a contingency if everyone dies/goes mad early in the session.
How soon will the foolhardy go mad?
Quite easy, it's usually sufficient to look at the slimy thing with the tentacles.
Also, you should check out the recent review at RPG.net.