Transfer rates stayed the same with the installation of the SmartWare software, though the user experience decreased. If you don't install it, every time you connect the drive the software will mount and ask to be installed. This was extremely annoying. Apparently there is now an update available for the drive which will hide the SmartWare drive, though you don't recover the 614mb that it is taking up. The software offers some encryption and auto-backup features but for the most part can be skipped entirely. I would recommend either repartitioning and reformatting for the advanced user or downloading the update to suppress the SmartWare drive. The software just isn't worth the additional overhead and hassle unless you really do feel you need the additional encryption features. Though more practical would be just adding an additional program like TruCrypt.
Some might find the MicroUSB annoying if all of their other devices are the standard USB port. However, more and more devices are moving to this so I didn't find it to be a problem. I was able to use the same cable for both my Blackberry Tour and the drive. In the end the drive is good for large backups and portability. The drive is large enough to hold a lot of data and the price point of under $80 makes it inexpensive.
So taking account the size, price, portability and general use, the WD My Passport Essential 320GB proves itself a great option for your portable storage needs. The annoyance of the included Smartware Software knocks it down to our Silver Seal of Approval. For most though the auto-mounting drive can easily be ignored. After a couple of uses I didn't even notice it.