My experiences have been very positive so far. Every time I've done online check in, my room has been ready on arrival (not everyone has been so fortunate, but I typically arrive between noon and 4pm, so that may be why). I've never had to wait in line to pick up my key, and I've spent less than five minutes at the front desk. You do have the option of changing rooms if they assign you one you don't like. The last time I checked in, when they gave me the room number, I asked where in the hotel it was located and they pulled out a room map and showed me and asked if I wanted to change. I didn't, but it was nice to know they were willing to do so. It has come in handy a few times when I've arrived the same time as the ME bus - the regular check in line would be huge, but the online line would be just me.
I don't know what to say about the upgrade though, because it's impossible to know if I've missed out on an upgrade by doing online check in. In over 100 visits to WDW, I've only received what I consider to be an upgrade (from regular room to suite) once. A few times I'd get a garden or woods view instead of the standard view I'd booked, but I don't necessarily consider that a true upgrade. I figure the room assigner distributes the magic upgrades as they see fit, so however you check in your odds should be the same. If you are wanting to ask about a paid upgrade, you can still do so when you pick up your online check in package.
