I have been using Fresh Direct for about a year now and can't say enough about it. I order 2-3 times a month and have always been pleased -- once a broken yogurt container caused a bit of a mess but stuff like that happens. I've never received anything rotten or in bad shape (perhaps I'm just lucky?).
As far as produce, nothing in my neighborhood (which is one overpriced gourmet grocery and several horrible delis where the produce is literally rotting before your eyes) comes close. I've actually become much healthier now that Fresh Direct provides me with a convenient source of good quality fruits and vegetables. What I love about Fresh Direct is that they highlight seasonal produce -- a recent promotion ushered in apple season with a giveaway of one peck of apples with every order. Their promotions extend to all areas of the site, actually -- once every customer was given free milk and cookies.
Pricewise, I consider them comparable to Whole Foods, but the advantage of having things delivered is that you can buy in larger quantities (I'd never be able to lug home a case of soda and a big bag of cat litter on the subway, etc.).
There is some disagreement about whether tipping the delivery guy is expected -- some people tip, others say that the delivery charge covers that. Fresh Direct drivers are not allowed to solicit tips, but I can say from experience that if you choose not to tip (which I have done occasionally when I haven't had cash or when it's been a tiny tiny order), they are not very happy. On the flip side, whenever I've tipped (even a couple of one dollar bills), the delivery person has been nothing but sunshine.
Like anything else, I think Fresh Direct is what you make of it. I supplement my Fresh Direct orders with local runs to the deli and gourmet grocery for miscellaneous non-perishables and prepared food. I use Fresh Direct for the things they're good at -- fresh, seasonal produce and a variety of bulk items. This system works well for me and I'd recommend Fresh Direct to anyone.