Ask the HD/BluRay people who made it part of the new standards (and anime buffs).
Bundled with 5.1 HE-AAC audio in an mkv container (mp4 as a container really isn't as nice), you can keep a manageable file size for a beautiful looking/sounding movie.
The downside is people ALWAY bitch about it not being divx/xvid/playable on their Xbox/Standalone divx-DVD player. It can also be a slow encoding comparatively if you don't have dual 64bit cores and Niagara Falls channeled across your CPU.
That said, given a choice I'll always lean toward an x264 over Xvid because it IS the future of compressed video and is very very very nearly ready for primetime.