I dig AU for many of the reasons that folks have already posted above, but I do have one knock against it.
The magic system is not quite up to snuff. There are some big drawbacks to it if you are going to play it sans house rules, which many DMs and players are doing right now to get a feel of the rules. There are some great ideas and the concept is fantastic, but the execution doesn't measure up.
First, most of the magic in the system is geared towards combat. One of the design ideas behind the system was that magic would not be able to solve every problem. This concept is used to balance the game in many respects. However, the remainder is primarily geared towards combat, and I think that's a problem. Gone are many of the spells that boost mobility, or provide the ability to disguise yourself, or polymorph your character. Some of the spells like Haste and Polymorph Self were/are problematic in D&D, but AU's solution is do away with these kind of spells altogether.
Second, the templates are designed to provide more flexibility, variety, and usefulness to spells. However, a number of them are incredibly weak. The Earth template, for example, is applicable to only a few spells, and it's benefits are not much of a bonus considering it costs a feat to use the template. The War template allows you to boost the number of creatures effected by certain spells, however when you take a long look at the list of applicable spells that can use the template, there's not many. Just like Feats in 3rd edition, AU has templates which will become must haves, and others which will become "what were you thinking in taking that?" selections.
A balancing factor amongst the spellcasting classes are the spell types (Simple, Complex, Exotic, and Unique). Most of the classes only have access to Simple spells to start, but can gain access to others through the use of feats. For the Complex category, this works well, as taking an Elemental Mage feat will grant you access to all spells of the appropriate type (For example, a Mageblade with the Elemental Mage - Fire feat can cast Complex spells as long as they have the Fire subtype). This works well, I think. Where the Feats = More Spells method breaks down is when you are seeking to gain access to an Exotic spell, or want to create a Unique spell. Here the system becomes a One for One trade. Each exotic spell requires a feat. IMO, this is far too steep a price. Spellcasters receive few feats as is. For some DMs and players, this may be a good thing, particularly in low magic games or games where powerful magic is rare. However, it limits players to a smaller subset of spells in the AU handbook and punishes players for seeking out certain spells. The decision to take an Exotic spell now makes those spellcasters weaker for their selection, considering all the various other more potent feats they could've taken.
Fortunately, most of these problems can be solved very easily. As more spells come from other sources, they can be classified as Simple or Complex, as opposed to Exotic. More spells that are useable with Templates will appear. Spells with a utility outside of combat can be added, while still holding to some of the design tenets of the system. But for now, if you are just using the AU handbook, the choice is sparse and not all that flexible as it first appears.
