Pros: Cheap, easy, can put in however much you want, backed by ING.
Cons: Not useful for true dollar cost averaging unless you have lots to contribute each month.
Trying to clear up some of the strange opinions about Sharebuilder around here. Sharebuilder basically simulates Direct Purchase and Dividend Reinvestment Plans (DRIPS) without any of the fees generally associated with DRIPS: fees to set up accounts, or to buy a single share of stock, or to reinvest dividends, or to make optional cash contributions, and so on. Not that all DRIPs have fees, but the vast majority do--go over to Computershare or BNY Stock or Mellon Investor (there's a couple others that I can't remember right now) and look at the Direct Purchase/DRIP plans there, the majority of them have setup fees in the $10 range (if they're direct purchase plans) or require a single share of stock to join them, and there is no efficient way to buy a single share of stock anywhere. I mean, Directinvesting.com charges you $25 per DRIP to buy the one share, $50 if you're not a subscriber to their services, plus the actual cost of the share. You're in a big hole from the beginning, percentagewise.
Now--with Sharebuilder you pay $4 per trades made with an automatic investment plan. Like a DRIP, you don't order actual shares, you invest with a set amount of money (so you end up with fractional shares.) Also like a DRIP, you have no control over what you pay for your shares. Unlike many, many DRIPs, that $4 is all you pay--no percentage fees to reinvest dividends, no additional brokerage fees, etc.
Now the catch is, Sharebuilder is no way to do true dollar cost averaging, because if you contribute a little bit every week or something, you will get absolutely hammered with the $4 fee. If you're investing $25 a week and paying $4 every investment you're losing $208 bucks per year just on fees. 16% of your investment! That's nuts! And that would be a nutty way to set up your Sharebuilder account. However--Sharebuilder does not force you to invest every week, or on any timetable at all. Sharebuilder allows you to set up your plan so that it automatically invests when your money market account (with 3% interest, by the by) reaches a target value. Like, for me, I set mine up to invest when my money market reaches $400, so my fees are only 1% of investment. And I don't think that's too bad. If you could bear more fees, you could set yours to be $200, or put it in the four figures if you really want to minimize fees. It's all up to you.
Of course, doing things like that means you're missing out on one of the true advantages of a DRIP, dollar cost averaging. You can't dollar cost average when you're buying in big lump sums every once in a while. Now for me, this isn't exactly a problem, as I'm using Sharebuilder for companies or ETFs that I've researched and I'm enthusiastic about and expect them to be profitable in the long term. I don't care what the exact share price is when I buy; or, if I do, I can simply turn off my investment plan for awhile and wait for a stock to go back down. But if you're looking for the true advantages of dollar-cost averaging Sharebuilder is not the place to go; you need to find an actual DRIP for that (just watch those fees!)
Also: Sharebuilder is not for active traders, since it's $9.95 per active trade. Go to Zecco or Tradeking for that. (I use Zecco for non-dividend paying stock myself. Or stocks and funds Sharebuilder doesn't offer, there are quite a few of those. I think their business model requires a certain amount of volume on an equity to make it worth offering for cheap.) And you can automatic invest with a plan for $4 but all sales are active, so they're $9.95 as well. And I don't think you get to be a registered shareholder with Sharebuilder, the stock stays in their name. Don't expect to be able to buy cheap from Sharebuilder and then use that stock to set up a true DRIP as well, since DRIPs generally require you to be a registered shareholder and Sharebuilder charges $75 to produce a certificate (ugh.)
All that said, I do consider Sharebuilder to be a massively useful tool for the small or DRIP-style investor. You just have to know how to use it. And now that they're owned by ING, I'm confident they'll be around for years to come, which is a good feeling to have when you're investing for the long term. Just, for whatever company you want to invest in, do a little research: figure out if they have a direct stock purchase with dividend reinvestment plan, and see if the plan's terms are better or worse than Sharebuilders. Some plans have all fees paid by the company--check out Proctor & Gamble's plan, for instance. This is how I decide which companies I want to buy direct with versus which companies I want to buy at Sharebuilder. So there you go, one more dude's opinion of Sharebuilder at epinions.