I've used it many times. I've gotten great deals, some fantastic deals on hotels, never experienced "the priceline treatment".
Same here. In fact it's been just the opposite. Most of the times I've used it have been for 4* hotels for my anniversary. I tell them, "My wife and I are celebrating our anniversary. Could we get a room on a high floor with a nice view and king-sized bed." It's worked about 5 times for us. I never lied with that statement, but I'm sure I could say that and get away with it.
I've stayed at really nice hotels in Chicago, Toronto, Denver, KC, and St. Louis for $80/night after taxes, and the above request has always landed me a nice room in the top 3 floors of the hotel.
Edit: I did have one employee at a 2 1/2* or 3* hotel in the Colorado Springs area mention that I checked in with Priceline and had the look on his face like, "We're getting paid with peanuts for you to stay here," but I was otherwise not treated rudely even at that stay. Every other stay has been no different than if I had paid double the price through the hotel's website: no mention of Priceline and treated with respect and a nice room at every hotel.
Edit2: I once stayed 10 days in Colorado for less than $400 (I think it was more like $330) after all taxes/fees for 2 1/2* and up hotels by using the name-your-price Priceline feature. I've never paid over $80/night after taxes/fees even at the 4* hotels in the afore-mentioned cities.