We use miniatures religiously... I seriously can't imagine not using them, as it helps everyone to visualize the battlefield and to measure distances. And whenever I pop down a new mini they've never seen for the big bad boss, I get the 'ooooh!'s and 'aaaah'!s.
I got a big, hex battlemat that works great with some non-permanent markers. The only problem for me is that I very much prefer hexes to squares, but with the dominance of DnD almost all the third-party pre-made maps are squares. It really is fun to use those original, DnD maps you find in the modules (or whatever they call modules these days), and I wish I could find some third-party hex maps... but drawing things myself is ok for now.
I really couldn't go back to playing without figures (though if it works for you, be my guest). A friend of mine once ran an Exalted campaign with no maps or figures, and while it was a lot of fun, it was pretty impossible to visualize where everyone was and many players or NPCs did things that were pretty much impossible (I.e. meleeing a character that was waaaay too far away from them) because we couldn't visualize the space and no one knew exactly where, physically, there characters were in the midst of the battle.
Miniatures allow for more tactical and realistic combat, IMHO... I could never do without them!