Deal is dead, but OOMA can be had new for $200.
I saw it on Woot! yesterday and did some reading up on it. I currently have POTS and a MagicJack, and an unhappy with both. POTS is, well, too expensive for the little it gets used. The MagicJack is cheap and I now have it set up on my Atom file/print server as a service (an always-on machine anyways) but I haven't been happy with call quality.
OOMA sounds pretty nice in comparison. It is comparable in quality to other VOIP services like your cable company, Vonage, etc. (and from everyone who has used both, much better than MagicJack).
OOMA is a stand-alone device that you can plug your normal house phone into. It also has its own wireless so you can buy OOMA branded cordless handsets (not sure, but I think it is required to be able to use the second line of their "paid" service). It needs the OOMA cordless handsets if you want their HD audio support. It supports Bluetooth with an OOMA branded adapter that looks just like normal BT dongles, but supposedly is the only one supported in firmware. It also supports a POTS-input so you still can dial out if internet fails. With the Bluetooth you can use a BT headset with it to answer calls, or you can connect it to your cell phone so you can use your cell phone to dial out (in case internet fails?). Don't know how much they sell it for because to check pricing you need an account. The picture shows one of those tiny USB BT dongles that you can buy at Dealextreme for a couple bucks. Supposedly it used to support aftermarket dongles, but they updated firmware so that it only supports theirs.
The device runs off a 450MHz ARM CPU and runs some embedded Linux and Asterisk VoiP software. It has two network ports because it can work before or after your router. If before your router (between router and modem) it does QoS.
Because of the voice quality, it does require a somewhat decent broadband connection so those with super basic 128k-up DSL may not be able to use anything like this. It supports fax! MagicJack does not (not really). With OOMA you dial a special prefix with your fax and the device uses a different codec that is more fax friendly.
Service is not really "free." It was to early adopters, who (unless signing up to paid service) got service for absolutely free after paying for the hardware. What happened was that the Man stepped in (government regulators) and charged them the same taxes/fees that normal phone service is charged. So, OOMA then started charging around $12/year for taxes. Then, fees got raised on them, so now they charge a monthly fee. It may vary by region, but for me it would be around $3.47 per month. They have a page on their site which lets you input your zip code and they'll tally fees/taxes.
The "paid" service is $9.99/mo (plus taxes/fees). Main features are that it gives you a second line (again, not sure but it may require an OOMA handset) plus gives you blacklist abilities. That may almost be worth the money in itself for me! Imagine blacklisting telemarketers so you never hear from the same ones again? This being election year, I'm surprised that I haven't gotten recorded political messages like I have in the past on my POTS. Used to be that prepaying a year was a discounted $99, but not so sure anymore.
They also have an "activation fee" of around $60 or $80 if you buy a used OOMA. New OOMAs include that fee. Presumably (we hope) the refurbised OOMAs are exempt from it as well.
The final potential fee that I know of is the number transfer fee of $40. Yes, you can keep your number! That is unlike MagicJack which has promised it as an upcoming feature for several years. The fee is waived if you prepay one year of their $9.99/mo "paid" service.
Like most VoiP devices, you can take it with you and even use it from other countries. The limitation of course would be that it requires a network jack so you probably won't be using it many places with WiFi (airports, hotels, coffee shops). In this respect MagicJack (or Skype) is probably better. OOMA has a rudimentary iPhone app so you can somewhat keep your number on-the-go. I think Android/Blackberry apps will be forthcoming.
Oh yeah, one additional feature is that it supports your in-wall wiring. Basically you can plug the device into a wall jack and it then activates all your wall jacks. I think (not positive) how it does this is it uses the second pair since phones only use one pair of wires, and most (modern) phone wiring is two pairs. You may need adapters or special cables to enable this.