sIFR has been getting a bit of a mention lately on the Web Standards Group mailing list.
Whenever the subject comes up I’m usually the first to denounce it as an evil work of Satan (usually after consuming several alcoholic beverages :p)

For posterity’s sake, I thought I’d put down my thoughts on why I don’t like it:

It’s not accessible

Before people go getting all defensive, let me just say that it’s not accessible for me – one of my most frequent actions in a web browser is to Ctrl+click (or Option+click) links to open in a new tab, from what I can see, sIFR won’t let me do that – the link just opens in the same window.
This is mostly the fault of the Flash Player itself, right clicking on the link gives you a couple of options (Open, Open In New Window, Copy Link), but doesn’t give me the full functionality that is present in the browser (Open In New Tab, Save Link As…, etc.) as well as any functionality that has been added by browser extensions (‘Open Link In IE’ being the first that comes to mind).

Selecting text is broken

Yes, it does actually select the text, but it doesn’t appear to. Not exactly earth shattering, but as a compulsive text-selecter it’s a bit annoying.
As an aside, when you select text inside the Flash, the highlight style is different to that of the browser.

It doesn’t scale if you resize text after page load

Once again, not a huge issue, but (being an old bugger) I find myself resizing text on the fly quite a bit – especially if the designer has used small/badly contrasting type. Mostly just a bit of an annoyance, headings that sIFR has been used for are usually in a larger font size.

To be fair, these issues are pretty pedantic, and the link & scaling ones can probably be overcome with a bit of scripting, they’re just the things that annoy me.

Overall sIFR is a pretty good alternative to the many other image replacement methods out there.