Air Media Server works flawlessly as long as your connection is fast and your computer has enough processing cycles free to transcode on the fly. I found in testing that AMS can bring a 802.11g router with light traffic to its knees (The router had to be restarted: I figure it was a cheap router).
Also, transcoding adds a considerable amount of lag time from hitting play. Earlier versions would sometimes fail to start streaming because of slow (weak signal) WiFi & heavy transcoding delay. It might still happen with newer versions for iOS, but I have yet to encounter this problem.
It will play movies that are already compatible with iOS with no processor hit, and instant streaming. So, I usually transcode with handbrake if I know that I will be streaming the video. But it is nice to know I don’t HAVE to if I don’t have time. Internet sharing works surprisingly well, but again, make sure that your home’s ISP has fast upstream for best quality, and you have a static IP or use something like dynDNS so you can find your server far from home.
Use of this app is dependent on you having a need for it, and quality is completely dependent on your hardware. If you have a slow network, you will have a worse time. I was using a dual core MacBook Pro (2.53GHz) and the transcoding took up almost all available processor time. This is not a big deal, since for most people, the machine will be idle anyway.
Of the problems I did have almost none of it is AMS’ fault. It is very quick and easy to set up as well. This should appeal to less technically advanced users. Essentially you launch the app and chose which folders to share. (Optionally one can change processor load and if you wish to share over the internet.) On your mobile device: you launch AMClient, select the AMS (or enter its IP if it is over the internet), browse the folders, and hit play.
I should note that I got the iOS app for free (via AppsGoneFree {AppAdvice.com}) when it was discounted to free for a day, so I am probably rating it higher than someone paying full price for the iOS component.
The bottom line is Air Media Server is a quick and easy way to start streaming content to you mobile device with no hassle assuming you have modern equipment.