Pros:
Good VFM
Gingerbread 2.3.5 (some are saying its having 2.3.6 as well)
Good processor for that price
Cons:
Low resolution screen
Bad camera (video recording sucks)
No custom ROM support yet AFAIK
Better go for Dell XCD as it has got 800x480 display and excellent ROM support. Check its thread here on TE, its got lot of replies.
If your budget is very strict, then Galaxy Y is a good buy. Its a nice entry level Android. But honestly, good Android experience starts from Moto Defy and later.