I'd highly recommend it if you have a kid who likes Ariel. Otherwise, I'd probably skip it. My daughter loves Ariel, so we eat lunch there once on every trip (I've never had dinner there). If you decide to eat here, make sure to make a PS as there is almost always a long wait during prime dining hours.
The menu is limited. If you like burgers, fish & chips, chicken pot pie, and pasta, you should like it just fine (I think there's also a salad or two). If you want something a bit "fancier", you won't find it here. The kids menu has the typical fish & chips, chicken fingers, etc. The "octopus" hot dog is really cute - they take the bottom half and slice it lengthwise into strips, then spread the strips out like the tentacles of an octopus. The kids meal dessert is cotton candy and the meal includes a little plastic bucket and shovel (like you'd use to play at the beach).
The character interaction is great. Ariel is wheeled out on a cart periodically (we usually see her twice per meal) and parked at the front of the restaurant. The kids go up for pictures and autographs, and on our last visit they did a little "circle time" where they sang songs with Ariel. After the initial rush to see Ariel when she first comes out, it usually dies down and there's a period where she's sitting there with almost no one around. On several occasions my daughter got a decent amount of quality time with Ariel because no one else was waiting to see her. Also throughout the meal Chip & Dale, Goofy, and Pluto go around the tables. Finally, about once per meal, they bring out a basket of maracas and sticks (for banging) and the kids get to choose their instrument of choice. They then "play" these while they march around the restaurant following either Goofy or Pluto.
As the other poster mentioned, Goofy's Kitchen (at the DL hotel) has better food and a greater variety of characters. Breakfast at the Plaza Inn also has Pooh characters.