During the Big Barrow Downs Britain Moot, we watched this (and the Return of the King animation, which shall not be spoken of). The general feeling seems to have been that The Hobbit was the better of the two, despite the songs being a little cringe worthy and the faces being somewhat creepy.
It follows the book rather closely and there is a general sense of it being a work of someone who actually wanted to tell the story properly. Far more, I think, than this version...
http://www.youtube.com/watch?v=m-t9OULNKlc
So, yeah... One thumb up for the animated Hobbit from me.