Pandora works fine on my Nexus One. I like the fact that it launches directly into the station I was last listening to -- one touch and let it go. It has a couple of limitations with respect to the desktop functionality: you can't add artists to a station, and the info includes only the artist and song info, not the album info.
There are a couple of things I find annoying about it, related to the service, not the Android app. First, Pandora has a more limited library than other similar services, so I hear repeats more frequently. Second, it sometimes seems to get stuck in a rut, playing songs selected by the same criteria several times in a row. For example, apparently the only Carpenters album is a Christmas collection, but I selected it anyway to add to my radio station. I got a Christmas carol by the Carpenters a few days ago; when I skipped to the next song, I got another Christmas carol by a different group, and the same thing happened when I skipped that one.
I'm alternating at the moment between Pandora and Slacker Radio. Slacker seems to have a better playlist for at least one station I like, but it's annoying on start-up and finish: you have to select the station when you start it up, instead of remembering what you were listening to most recently, and whenever you quit, you have to hit a "no thanks" button for upgrading to the paid version.