This past week I officially cancelled XM in favor of using Pandora in my car through my iPhone.
I mentioned before my displeasure with with the XM/Sirius merger, mainly XM wiping out their music channels and replacing them with Sirius stations.
Pandora works exceptionally well in place of an XM radio as long as you're only after music. (Which I am.) The Pandora pros include full color album art, complete artist and song titles, the ability to skip songs, and most importantly, the ability to customize your stations by voting songs up or down.
The signal reception is a non-issue. I can drive the 30 miles to work and back without ever encountering a break in the stream. This is true over 3G and Edge.
Cons are few. Sound quality is not as good as XM, although XM was pretty well compressed to begin with. Pandora really isn't far off from FM quality and should only get better in the future as bandwidth increases.
Best of all, the money saved from XM can go to offset the monthly AT&T/Apple money pit.