Overall I'm happy with the arcade emulation, especially since vertical games work great on FBA (screen flips to the left so that you can use the right analog stick and the buttons). Even with XMAME and MAME4All you can re-map the buttons on vertical games to the D-pad and use the left analog for control, although that's not as nice as FBA's solution.
Some of the newer FBA titles can have a slowdown, but it's rare. Sound and graphics all look good to me, I've never noticed any stuttering or other emulation glitches.
XMAME is the only MAME that supports the dual analog sticks, so you'll need to use that for games like Robotron or Smash TV.
The analog sticks make a pretty decent trackball alternative, as well. Not perfect, but good enough.