I attended a recent AustinJUG on OSGi. I think OSGi is one of those technologies that is hard to really grasp and have a solid opinion of until you've used it. I spent most of last year developing a set of applications on OSGi and learning the ins and outs of OSGi while tech editing OSGi in Action, so many people came to ask my thoughts. I am most certainly not an expert, but I have used it enough to have opinions. I thought I'd summarize here:
OSGi does a really good job of what it does. It does work. You can break up your app into very independent modular components and manage them. It's not a half-baked solution, and given the complexities of this kind of class loading, that says a lot. There are still gotcha's with things like the context class loader. (OSGi ignores it)
OSGi is a very good fit for servers and services. If you truly have lots of mostly-independent, dynamic services that need to work together, you will like what OSGi gives you. It can be used for webapps, but it is not a great fit. After working with it, the developers I was working with wanted to move the web server and WAR files out of the OSGi environment.
OSGi does not feel like modern Java. OSGi was designed before the Java 5 revolution. The APIs are cumbersome and feel outdated.
You will want to use a some sort of framework with it. We used the Spring OSGi integration. I didn't enjoy that, but it seems like the best choice when keeping in mind the big picture.
Working with your own code is wonderful. Working with other people's code is not so easy. If someone isn't managing an OSGi bundle for the libraries you want to use, you will feel pain. Even if they are, you may still have headaches.
Summary: OSGi works, but don't use it unless you really need it.