I could not figure out 1st Ed and hated both versions of 2nd ed psionics that I played, but think the 3rd ed is excelent. For the first time since I started I am enjoying having psionic character both to play and in my campains.
I've been using psionics in my game since I first got the Player's Option book that introduced the revised psionics rules. That, and being a big fan of the Dark Sun setting got me pretty hooked on them IMO, the 3rd edition rules have given psionics a solid rules set the works well along side the magic users.
In my campaign, only creatures that have Psionic powers (mind flayers) get to use Psionics. With wizards, sorcerers, clerics, etc. I feel that there is no need for an additional class with mystical powers.
I am constantly tempted to replace magic with the psionic system, especaily with all the extra stuff that is coming out for it. The ITCK adventure that converts PHB spells over to psionics and the new WotC online psionic healer article have finaly started making the psion a viable, if weaker alternative to magic users.