We use them at work sometimes to transfer files between computers. We have never had a problem with them. I've seen them with capacities from 512MB to 2 GB. So they definately have an advantage over floppies in regards to how much they can store. Their small size is a plus too.
For his belated birthday, a friend of mine at church today just got such a USB stick (512MB) made by Victorinox - that's right, a Swiss Army Knife model. Light, pen, scissors, mini flathead, file, knife I think. Even the ladies were impressed.
I have a 4 GB ScanDisk stick which I use mostly for bringing files home from church to edit and post the audio to fpcr.org as well as for temporary backup. Never had a problem, and while I've misplaced it, haven't tried to send it through the washer and dryer yet. A little pricey at the time; not sure the price now. Bought from Dell.