I use it successfully between the US (MtGox) and Canada (Virtex).  It's faster and cheaper than any alternative (exchanging at the bank, then either wiring it or buying and mailing a certified check). The only issues are

(1) price fluctuation within the hour it takes to confirm the BTC transaction

(2) recently there is some trade imbalance between the two exchanges that skew the exchange rate compared to regular fiat markets, and

(3) lack of legal framework that makes me a bit nervous. 

The first two issues may be problems or opportunities, depending on your situation. Either way, it should cancel out in the long run: sometime you gain a bit, sometime lose a bit.  All in all, I can vouch that Bitcoin works in real life, and works great.

Atm bitcoins are by far the easiest way to send money out of China where I'm located.

Here doing a wire involves physically going to the bank, standing in line for ages, filling out a bunch of idiotic forms and you're not even allowed to wire foreign companies from here without obtaining permits etc.

I light of that I mainly use BTC when I'm buying stuff from the US/UK.

I guess this is only possible between countries where the charges for buying and selling BTC are lower than the international bank transfer fees, or where the buying and selling services are faster than the international transfer.

Within the EU, a bank transfer is not very fast, but the cost is very low. I believe the fee is about 0.5 USD if the transfer is made in EUR.

I keep wallets in multiple currencies on the Gox. That side of things seems to work well. It's just getting money out of a financial dictatorship like Australia that's a b*tch. Tens of dollars per international transaction, regardless of whether the currency gets converted or not.

From Europe (SEPA zone) to the US:
1/ Wire transfer euros to bitcoin-central.net: cost zero and takes about a day
2/ Buy bitcoins on bitcoin-central (cost zero fee)
3/ Send bitcoins: recipient sells them on mtgox and cashes out via Dwolla (cost 25 cts takes about a day)

Total Cost: liquidity spread + 25 cts and two days

If I do the same with banks it will cost me 16.50 euros and at least 5 days (I must write a letter to my bank: after that all I can do is hope they wont screw up, which they do quite often).

I want to do this for my biz , but  there's just not enough liquidity in the CNY market.

Is that something you no longer do because there isn't much price delta between those exchanges and thus not as profitable to arbitrage anymore?

There is a delta Stephen... and it is worthwhile, I no longer do it for various reasons, some technical and some personal:

From a technical perspective

• Profits only tend to be one way, eg converting USD -> GBP (check the currency pair yourself). If thats all you want to do then great
• Following on from the point above. To successfully make money from arbitrage you have to convert the GBP back into USD usually through the Fiat money markets. The difference in the BTC conversion exchange rate and the FIAT market exchange rate will be your profit.
• ...continuing from the point above. To initiate the trade involves a fairly complex process of placing the USD->BTC buy, placing the BTC->GBP sell and placing the opposing fiat GBP->USD arbitrage trade in the fiat market.
• on the plus side, if you're technically capable of handling the above, then I regularly saw 5% profit margins per trade (and still do)

Personally

• One of the currencies I bought was AUD. Recently the broker I used to sell BTC for AUD got scammed and has shut down (WorldBitcoinExchange) taking with it some of my money
• I have a full time job and as much as I'd love carry on running forex arbitrage through bitcoin, I can't. I was 1/2 way towards implementing an automated system to do this but it isn't an easy or simple task.