I think it's a respectable but underwhelming choice. It will make the court more diverse and add somewhat more practical experience, but I don't think it does much to balance the conservative intellectual dominance on the court, or to raise the level of the court overall. It's also disappointing that Obama seems to have pretty well limited the list to one gender and perhaps even narrower--there's little question the court will eventually be gender-balanced, but a lot of question whether it will command national respect or continue to function as a sort of higher political forum. On the other hand some of the same things were probably said when Cardozo (arguably the first Hispanic) or Brandeis were picked so who knows? Right now it seems more safe than inspired.
Addendum: Sotomayor apparently has diabetes, which doesn't change my opinion but makes me identify with her a little bit more.
Second addendum: My opinion is still unchanged, but I think the attacks on her for being on the Board of the Puerto Rican Legal Defense Fund, or saying Hispanic women make better judges, are somewhat silly. Once you have a judicial record, the decision should be based on that record and your answers to the committee's questions. That's all that matters.