We tried it out, and had a choppy connection for most calls. It's basically VOIP with a phone number attached, so you can do the same thing with MSN or Skype or a number of other services, just minus the phone number.
You have to keep your computer on at all times though for it to work like a phone, and if the internet connection gets slow, your calls will suffer. Plus like you mentioned, if either electricity or cable goes down, you're hosed ... where as a normal phone line only relies on one utility.