Airline miles are approaching the value of Italian lire or Vietnamese piastres. The hotels (knock wood) have been much more accommodating when it comes to redeeming points for destinations/times we actually want.
Overall I feel the same way, but we've had good luck getting FF tickets. It's a bit tougher for us, since we need four tickets on the same flights. For last summer's vacation, we got four tickets from BDL to Northwest Arkansas on American; this years we got four tix on American to Tucson. For both trips we were able to get all the tickets on the 25,000 mile base point category.

That said, the AAdvantage Mastercard is about to be put out to pasture in favor of a Marriot Rewards Visa. I already use a Hilton HHonors American Express for my business expenses. We've had a lot of fun over the past two summers taking long weekends using the hotel points. We live close enough (as in driving distance) to some very interesting places to make this worthwhile. My perception is that the Marriott program is a much better value than the Hilton one - at least the Marriott properties seem to go for a lot fewer points than Hilton. For both chains, however, getting a free room has been a breeze pretty much anywhere we've wanted to go.