Here is what I tell people... (a little long)
My wife and I find value it membership, but it's not for everybody. The difference between being a DVC member or not is in the quality of the accommodations.
This past January, we stayed at two non-DVC resorts and two DVC resorts (yes, it was a bit hectic). One of the non-DVC resorts was an All-Star Resort. There was a stark contrast. The All-Star Resort was a madhouse with large school groups and other kids running around. There's also only one caffeteria-style place to eat. The DVC resorts are much more subdued and relaxed. The general facilities at a DVC resort (lobby, amount of staff, restaurants, grounds, etc.) are just at a generally higher level than non-DVC value resorts (although I thought that the Coronado Springs Resort was nice, too). In our opinion, the Beach Club and Boardwalk DVC resorts simply have the best location in all of WDW. They are walking distance from Epcot (about a 5-minute walk) or even Hollywood Studios (~20 minutes from Boardwalk and ~25 from Beach Club, if you wanted the excercise).
You must understand that in addition to paying for your membership, you pay annually for its continued use (dues include property taxes which we write off annually). For the basic membership, dues are about $700. Think about this, though... if you were to spend a week at an All-Star Resort, you'd probably spend about $700-800 on lodging alone. If you are smart about your membership, you can skip the weekend stays like we do (or stay at the least point-expensive Old Key West Resort) and conceivably get two weeks at WDW at much nicer locations. Many times, we use those weekends to visit Univeral Studios or the Kennedy Space Center and just pay $100 a night at some off-site hotel.
We are taking a Disney Cruise this fall. If we were to pay for it, it'd cost us over $2000, but it's actually only going to cost us about 1 1/2 year's membership allottment! My friend saw some pictures I posted from the Animal Kingdom Lodge and told me he wanted to take his family there. To get the same type of room we got, he will have to spend about $450/night! By comparison we stayed there four nights and only used about 1/4 year's allottment! We've been members since 2002 and have gone on 6 weeklong trips. On three of those trips we've been able to bring friends and family with us and we still have had plenty of points. We are taking family with us this fall, too (although, we are giving up any major trips for next year while we try for our 2nd child). The flexibility has allowed us to do this because of the banking and borrowing system.
Additionally, the service we have received has been very helpful. There are a few discounts that you get like at restaurants, good both at WDW and at the Disneyland Resort in California (which is where I live). Going through the DVC system, I was able to secure our Disney Dining Plan correctly, whereas going through the regular WDW system I'm not sure I would have been able to get it set up at all ("That's the difference between the DVC and regular WDW!" a DVC castmember told me).
Also, when you choose to travel outside of the WDW, a lot of the guesswork is removed regarding the quality of your accomodations. We have used it to visit Pennsylvania and Hawaii and have been pleased both times. Actually, when I tried to talk them into allowing me to stay at another condo place (keep in mind that almost anywhere you'd stay with the DVC is technically a condo) that was a part of another, but related, system, I was told that they hadn't verified the quality of the location so they couldn't allow me to book there.
The bottom line is that you get to stay in some pretty nice places for the same or less money than if you were to go it alone. Yes, there is the large upfront cost, but if you want quality and plan on taking yearly (or even every other year and not necessarily at WDW) you may find value in it.
