The Grails Eclipse plugin is crap. It crashes for no reason at all, and doesn't really support Groovy's flexibility. NetBeans and IntelliJ are rumoured to be much better, but I haven't tried them yet.
Does it perform? Of course it does. Even Ruby on Rails performs, as long as you throw enough servers at the problem. I have no idea how Grails compares to various Java frameworks, though.
Does it really confer rapid development benefits? Well, I'm still missing a lot of good Ruby/Rails stuff. It doesn't recognise Date and Enum request params automatically (then again, Rails also has some issues with Dates), TimeCategory should be part of the standard configuration but isn't. But there's also a lot of stuff that requires remarkably little configuration.
It's not quite where Rails is (I'm particularly looking forward to Rails 3), but it's a lot more pleasant to work with than many Java frameworks. Even so, the magic below the surface goes way deeper than in Rails. For example, the system for Constraints is really powerful, but built on top of a huge layer of impenetrable Spring stuff, and really inflexible if you want to use that same power in a slightly different way. Rails is easier to subvert, IME.
Is it worth it? Yes. Is it a better choice than something else? That depends.
