With you guys mentioning it, and my friend telling me to sign up, I downloaded it and tried the free version.
It sees my iTunes library, including my playlists (though not the Smart Playlists!) The issue I am experiencing is that my library is AIFF based, so Spotify does not read all of the albums. It ONLY reads the songs I have converted to AAC (for my iphone), or mp3s from demo material, as well as other compressed formats. Because of this, I have less than half of my 1000+ album iTunes library available in Spotify. Sure, it's free, what I am I complaining about?!
The screenshot below shows a custom iTunes playlist selected in Spotify with the message that essentially says that playlist is empty--it is not, it's filled with AIFF format songs.
I've had limited listening experience with Spotify, but the decreased quality of the 160kb/s tracks is noticeable with my built in iMac speakers. The paid membership uses 320kb/s tracks so that should sound very good, especially since the system is likely a portable/remote system(read non-critical). I have no plans to pay for the service at this point. I do need to work on reorganizing my iTunes library for iPhone/iPod use anyway so maybe then spotify will be more appealing to me.