After spending some time with Google Hangouts, I can say with confidence that I can't stand it.
I was a avid user of Google Talk, and really so no huge issue with it despite the ugly UI. I didn't mind that I didn't have read receipts. I didn't mind that I couldn't see if someone was typing. It sent and received messages like a champ, which is all it really needed to do.
Hangouts brought promise of a more unified chat experience, but it so far hasn't lived up to that. Yes, it looks VERY nice and has added some nice, but not necessary features. My big problem is what they've taken away. I can't see who is online or ready to chat very easily. I can't set a status message. If I'd like to share a link with someone on my Android device, I need to already have a hangout open with them. It's a slightly more confusing experience for no good reason.
What will fix my hangups about Hangouts? Status messages. Ability to set my availability. Integration into the Messages/Gmail/Voice app on Android.
Did I miss anything? Am I completely off base?