I like alignment, too, especially the two-axis system. Most of the drawbacks seem to come out when people don't really take the time to understand it.

Biggest mistakes people make when trying to apply the alignment system:
1. Confusing Law with Good and Chaos with Evil. (CG Haley and LE Redcloak beg to differ.)
2. Changing alignment too quickly, based on single actions rather than patterns of behavior and character development: "You got drunk and killed that guy in a bar fight! You're Evil now."
3. Treating alignments like factions which must always be hostile to each other.
4. Confusing "Lawful" with "Law-Abiding", "Chaotic" with "Absolutely Random", "Good" with "Nice", or "Evil" with "Omnicidal Maniac".
5. Playing according to your character's alignment rather than his personality.
6. Treating an alignment change as though it's a punitive action rather than a sign of character development.

The alignment system is a good thing because it allows you to have a shorthand for your character's ethical beliefs and goals. It's a good role-playing aid. If you didn't role-play at all, you wouldn't need alignment; you'd just be out there gaining as much XP as you could. With alignment, you have a way of briefly stating what your character values, and which cosmic forces he's connected to.