I have no self control so I bought an Echo while Amazon were offering £50 off for Prime members last week. Here's a brain dump of my initial thoughts on the device.
Setup is pretty easy using the Alexa app. The Echo creates it's own wifi network which you need to connect to so you can choose your home wifi network. Once that's done, you can connect services and products like Spotify and Hue lights from within the app, as well as add additional "skills" (Skills are what Amazon call apps for the Echo).
Update: As /u/jennorocks pointed out, if you say the word "playlist" when asking for a playlist, it works pretty well.
I linked my Spotify account in the Alexa app and once setup, I was able to do a two things with it: either tell Alexa to play music on Spotify (playlist, artist, album, genre) or start playing through Spotify Connect which sees the Echo as a device from within the Spotify app. Getting Alexa to play one of my saved playlists was difficult as it seems to just search Spotify and play the first search result. For example, I have a playlist called "90s Hits" but it kept playing a similarly named playlist. I don't know if there's some trick to force it play my playlists, but I haven't found it yet.
The Echo also functions as a bluetooth speaker. Saying "Alexa, pair my device" will turn on the Echo's discovery mode which I could then select from my phone's bluetooth settings. The Echo can then control my phone playback by asking Alexa to play or pause. If my phone is disconnected from the Echo (e.g. if I leave the house), when I come back I can say "Alexa, connect to my phone" and the Echo will reconnect.
Alexa understood every command I gave her including when we played around with it in the office and you can see a list of commands you've asked in the Alexa app, which has Google Now-style cards with extra information for some things like traffic, timers, or shopping lists.
I was looking forward to using IFTTT to automate some tasks such as moving my Alexa shopping list items to Todoist but IFTTT doesn't currently support Echo in the UK which is disappointing, but IFTTT say they're working on it. Hopefully this will be fixed soon.
The Alexa app is pretty slow and janky (it's a web app in a wrapper) but it's only used for setup of the device, and adding new skills. You can access the "app" from alexa.amazon.com as well if you prefer to setup from a browser.
I don't currently have any smart home devices so I wasn't able to try these features out, but given how well everything else works I'm sure this will work equally well. The Echo does feel like somewhat of a novelty right now, but it works as a Spotify device, bluetooth speaker, and for timers while I'm cooking so I'm pretty happy with it.