There's not a great degree of movement in any direction, but you don't really need it. The SpaceNavigator is extremely sensitive, and only requires the slightest movement on any axis. You can of course tailor the sensitivity using the supplied utility. The buttons can also be mapped to keyboard shortcuts for each application that you use the device with.
The idea is that you still use your standard mouse in your right hand (assuming you're right handed) and use the SpaveNavigator in your left. This takes a bit of getting used to at first, since you're generally not as delicate or accurate with your left (read not dominant) hand. You'd be surprised what you can do with your left hand once you start using it though - I'm not saying that I'd want to use a conventional mouse in my left hand, but working with my mouse in my right hand and the SpaceNavigator in my left becomes surprisingly intuitive, surprisingly quickly.
But the big question is whether the average PC (or Mac) user actually needs the SpaceNavigator. Well a large part of the answer to that question is what you consider the average PC user to be. If you happen to be a keen amateur photographer, complete with a copy of Adobe Photoshop CS3 on your machine, then the SpaceNavigator will appear quite attractive. With digital cameras producing seriously large images these days, it's hard to fit a whole image on your monitor when editing, even if you've got a 30in model. This means that you have to move around the image or zoom in and out to edit it, thus leaving you to resort to using the mouse for navigation as well as editing, even if you're a keyboard shortcut maestro. However, With the SpaceNavigator in your left hand you can happily zoom in and out of the image and pan up, down left and right, leaving your main mouse to handle editing duties.
Then there's the 3D aspect to CS3, to which the SpaceNavigator lends itself beautifully, but you're really bordering on the professional user here who's likely to be looking at one of the more fully featured 3Dconnexion devices. For the casual 3D designer, the SpaceNavigator works brilliantly with Google SketchUp allowing you to easily navigate around your creation while building it. Even if you're not a budding architect, SketchUp is great fun to mess around with.