Summary:
Windows XP on the desktop. Went very smooth. Added great new features. Noticeably improved performance. MUCH better camera functionality.

Details:

1. I uninstalled ZLauncher, just in case. This was the only third party app I had installed that might sort of screw with the system.

2. The first time I ran the update I got the "insufficient memory" message on my desktop. Tried it a couple of times. No luck. As a result of reading some posts here on TreoCentral, I unplugged my synch cable from my powered Belkin USB 2.0 hub and plugged it directly into the back of my machine. Fixed the problem.

3. Followed the instructions, update went fine. It automatically restored all of my apps and data. I re-installed ZLauncher.

4. The update added voice recording, available via that free SoundRec app; sorry too lazy too look for the link. Works excellent either held close and speaking low, or held in front speaking normally. Mic quality is clear and crisp.

5. Speaker volume is much louder, sounds much cleaner. I can put on a Shoutcast stream, crank it up, and walk around the office or the kitchen or whatever and hear it fine.

6. I am a SnapperMail customer, but really, if you don't need the more advanced features of SnapperMail (subfolders, finger mode, IMAP support, etc.), this new mail app seems to work fine (and it's MUCH smaller). I haven't bothered to re-install SnapperMail yet. I'll see how long I go without missing it.

7. Everything seems faster, both application performance and data over the network.

8. The camera is VASTLY improved. No more blue dots. Much faster (and much more accurate) automatic exposure setting. Really makes picture mail between my wife and friends/co-workers and I fun now. It's SOOO much easier to take a decent picture.

So this former Treo 300 user, long-time Treo 600 user (since it came out anyway) HIGHLY recommends the Sprint 1.20 firmware update.