I'm still noticing people who are holding out on Java 5, and I'm finding it quite puzzling. If 1.4 is working for you and you are deep in a dev cycle, I can certainly understand that you might not find it prudent to change JVM versions. But, why would anyone go into a project now and not be on Java 5?
Java 5 is a must-have update. You have to go back to Java 1.2 to find anything of similar importance. When Java 1.2 came out, it set a baseline for the Java platform. The 1.3 and 1.4 releases were very unexciting and although I definitely recommended upgrading in good time to the new JVMs, there wasn't really anything outside of core JVM technology that moved Java forward. Between those two releases, I can't think of anything besides the 1.3 dynamic proxy that truly added anything to the language.
Java 5 is different. It does continue the trend of huge advances in the JVM, and I'm more comfortable with the Java 5 JVMs in production than than a 1.4 JVM. More importantly, the Java language has moved on.
The most important feature is annotations. Annotations are huge. If you aren't yet using annotation-aware frameworks, you will be soon. Annotations change everything, and the sooner you get to Java 5, the sooner you can use them. You won't look back.
I'll also go out on a limb and say I still love generics. I know I just lost any credibility I had with the smarter-than-thou blogger crowd who will moan that the implementation makes Java inner classes look clever. Being a low-level bytecode and JVM gear-head, I agree with the criticisms on a technical level. But, the proof is in the code, and generics do wonders for making your code nicer. That's the bottom line for me. If I can write better, cleaner code - I'll call it a win. By that standard, generics are a huge win.
What about the rest of the Java 5 syntactic sugar? Yum. All I can say is that it tastes good. Enums and the new for loops might seem small, but they make a big difference in the code. They make such a big difference, that I can hardly imagine coding without them.
So, what's the deal? What is keeping people from Java 5? You have one of the biggest language advances yet (not just new stuff - good stuff) combined with a JVM that is at least as good in production as previous ones. I can't see any reason for not embracing Java 5 whole-heartedly.