I use last.fm for play count and last played sync. That functionality is very important to me. There was something about the way that the wifi play count sync worked that made me think "that wouldn't work for me," but I don't remember what it was.
I've never had an issue with last.fm not reporting the counts back properly. It sends back exactly what it gets so, even if it doesn't match something in their database, it winds up at the right track in MB unless you change tags in the interim.
I also use last.fm itself. I like the reports it makes on my listening, and I've had success with its recommendations. I've found new music I enjoy that way.
I use it less for the other ways it's utilized in MB - similar artists in the library, genre tagging, playlist generation, but I have used those functions and they are pretty cool and work well.
I've never used last.fm's album art and I'm not interested in artist pictures (I think they come from there).
Removing last.fm integration would be a big step backward IMO.