Under 1e, I found Psionics overpowered, tacked on and generally unusable. I also found them more consistent with a Scifi or other setting. That was then.
3E's Psionic system is everything I could want it to be. It functions as an alternate magic system or a completely different system. With the addition of Psionic feats, Psions and Psionic Warriors feel and act differently than traditional mages. I don't use Psionics a great deal, but they make an excellent spice. The system is downright elegant compared to the original version.
Psionics worked as an excellent change of pace, throwing some actual fear into my players when the high-level sorceror turned out to be a high-level Psion, instead. When dual-chained Greater Biocurrents started flying, and then one of the Psions teleported selected party member body-parts for damage...well, they weren't enjoying it much. Especially with the high-level astral constructs cutting into them. It was an exciting battle, and interested everyone in the Psi system.
I no longer see Psionics as a horror/sci-fi convention. Besides the Deryni series, there's plenty of eastern mythology that would put Psi solidly in the fantasy category, IMHO. For the most part, you can use it as you will...it's all just special effects, at the end of the day.
One thing I've noticed is that the Psi system is perfect for doing all sorts of 'Matrix' powers, like running up walls, super movement, and so forth. Generally speaking, if you've found Psi not very interesting, I think you should read it again more closely...there's lots to love there.
