It runs most games reasonably well, though it does get choppy sometimes. The big problem is that it doesn't enhance the graphics any. Its a pain to get games to run though, as they have to be in bin/cue format. Originals won't play. This means that if you have a stack of 200 PS1 games you need to convert them on your PC and then FTP them over.
If your interested in playing PS1 games, I suggest you check out the PC emulator EPSXE. On an HDTV, PS1 games look better through it than actual xbox and PS2 games. Somebody made a "port" of EPSXE that runs through xbox linux, but I don't think it enhances graphics either, and saving might be an issue too.