Illustrator is for vectorial design (photoshop handles pixels, illustrator... vectors) I do use it, to create icons, buttons, bars... then, I import them into photoshop to make the whole design of a website..
I LOVE ILLUSTRATOR. its clean! Give it a shot, take one day just to design, outcome is much better in vectors than photoshop.
I have CS3 and CS4 and I use both Illustrator and Photoshop. Although I use Illustrator more, (for work, signage) I like Photoshop better, because of the range of effects and the manipulation options.
I use Illustrator for logo and typography work,also its very good choice when you need small details letters printed,its best way to do them in Illustrator. Its also good for Tablet using,because offers pressure sensitivity to your brush just like Photoshop does but this way you can do it at any size without quality lose.
I use Illustrator everyday. I use it for making layout of ads, brochures and basically everything that is going to be printed. The images for ads and brochures are made / touchup in photoshop, but for final layout i use illustrator.
Vectors can be really, really useful. The pen tool is a pain in the @$$ to learn, but once you're in to it... You're set. Vector graphics are much more scalable than raster images. And it's much easier to do certain things with vectors instead of rasters.
don't you guys think that adobe is costly? i prefer using inkscape as alternative to illustrator and its much better than illustrator too.