I use a couple of MagicJacks. They work fine as long as your internet works fine. The quality of the service purely depends on your Internet. The voice quality is far better than Vonage. I do use Vonage for our offshore office. We have not completely shifted from Vonage, cause we are skeptical on how long the MagicJack service will be available and also what they will charge us after the first year. Right now they charge us $40 for 1 year.
It's really good quality for home usage. If you share connectivity than quality does go down a bit (Depending on the amount of internet bandwidth) - A safe bet is if you have 5 majicjacks and sharing connectivity via a router- you will need a minimum of 10 MB's dedicated internet bandwidth. For the price it's an awesome product.