I am still running Android 1.6. Google services - Gmail doesn't seem to work anymore (and I never used it very much), Maps I do use and they work, Talk I never used, Market I think worked OK till about a year ago. I cannot upgrade most apps I have on it, because the new version doesn't work on such old Android. I pretty much only use it today for calls and texting, and that works, and I guess most apps I have on it (including original Google Apps for things like Music, Calendar etc.) still works.
Regarding browsing, yeah, it's somewhat usable in emergency (the pages will load) but I never got very used to do it because the speed was always abysmal here (Czech Republic). The original Google browser still works.
So, I guess I cannot recommend buying one now (although perhaps with Cyanogenmod it would be better), but it works for me and I really wish I could replace it with something that has keyboard. :-(
