Disclaimer first: for computing, we're an Apple household and I work in the web industry.
Having said that: I have the 1st Generation Captivate, and it's my perfect phone. We have BlackBerry and iPhone in the family, but neither fits my usage as much as the Captivate. Both the hardware design and the software show thoughtful design. The Samsung custom UI on top of Android 2.2 is excellent, with attention to little details throughout. Screen appearance, fluidity, and flexibility are excellent, battery life is pretty good (charge every night, as with all other smartphones I've had). Camera takes good enough photo and video; a single, standard USB data/charge cable is handy and efficient; the SD card functionality is an important convenience. I can download music, video, web pages, PDFs, Office documents to it and read/listen/watch anything at any time, without a web connection or data charges.
As to physical size, it's great: very slim, so it doesn't bulge a pants pocket, but the screen is large enough to use easily. In fact, I can't justify purchasing a tablet, because I'm already doing everything I'd need a tablet for.
The bundled apps (calendar, notes, music player, video player, office productivity, email) are all perfectly usable, although the browser is a little too basic for me. And if the phone now comes with Android 2 (mine didn't, so I had to upgrade from Android 1), then the keyboard is even better than the fine original, and G-Talk (for texting) is now included, making a texting plan unnecessary (I actually got used to WhatsApp, so I've not had to use G-Talk). As for the bundled AT&T apps, I just avoid them, because they incur additional charges, and I don't ever miss them.
The one small annoyance was that registration with Google is required in order to sync the Calendar on my computer with the phone. As for the address book, it can be imported via Google, but since I avoid storing personal info in the cloud, I just exported the data from my computer and imported it into the phone's address book.
For additional apps, the phone automatically connects to the Android Market, and I've downloaded a few excellent (and mostly free) apps.
Extra cool: Without any additional software, the phone connects to a TV and displays anything and everything that's on the phone's screen - photos, videos, spreadsheets, PDF, web pages. It just needed a $7 cable which plugs into the headphone jack.
Bottom line: unless there are any newer models surpass the Captivate, I highly recommend it.

Recommended: Yes