I used it at the weekend. I thought it would be geared up for Parisians rather than tourists or short-term visitors but it is dead easy to use. You can buy a one or seven-day pass cheaply (I think the 24-hour pass is one euro, not much anyway) directly from any of the bike stands, of which there are many, using a credit or debit card. It's no more difficult than dealing with an ATM. You release your bike with a four-digit code that you select on first use, ride it to the area you want to go, then ride around looking for a stand with a spare slot.
Obviously once you know where the stands are it makes things easier but there really are a large number around (1450, compare this to 245 Metro stations- never more than a few minutes walk apart in central Paris). In popular areas the stands maybe full, necessitating a trip to the next nearest (there's a little map on the paypoint at each stand).
The bikes are fine. Heavy (22kg apparently), but seem to roll much better than their weight would suggest, three gears (a Nexus hub), basket (very handy), always-on dynamo lighting, enclosed chain.
Don't know what they are like uphill but Paris is fairly flat except a couple of notable lumps. Riding up the Boulevard St. Michel away from the river was probably the only long hill I encountered and that was easy enough for both myself and Ms P (not a regular cyclist).
The tariff is set up so that if you want a bike for a whole day a hire bike will be cheaper. The first 30 minutes is free, up to 1 hour 30 minutes it's pretty cheap, then the price increases.
The bikes were generally in good order, although before selecting one it is worth giving it a quick once-over.
The Wikipedia summary is pretty useful:
Velib- Wikipedia
