This review is free of any spoiler except things you could tell just from seeing the trailer. If you don't even see the trailers, skip this review!
Another review said that it makes sense that James Cameron took no risks with the story in Avatar since so many risks were being taken with the film techniques, and there's good sense in that. The story is eminently familiar. A followup review called it "the best FernGully remake ever!" and that's quite apt. There are also elements of many familiar stories about aboriginal peoples, along with every cliché about them being in touch with the natural world. Yet for as familiar, or derivative, as the story is, it's done remarkably well. With a very few noteworthy exceptions, even when the movie is being corny, it's still being emotionally moving.
While the overall story arc and the morality plays at its heart are very familiar (though timely!), there is a lot of well-developed and somewhat original stuff in there, which people can easily overlook because they're so caught up in how the broader strokes are familiar. In particular, the biology of this alien world, though it includes a few familiar elements and a few things that are inexplicably similar to Earth, but many other things that are really nicely inventive. I bet the movie won't get enough credit for those.
Visually the movie is beautiful, and remarkable not merely for the technical achievement but also simply because it is gorgeous. The world we're seeing is simply lovely in a lot of ways, having been beautifully and imaginatively envisioned, and the filmmaking entirely lives up to that vision. In particular, the bioluminescence and the colorful flying creatures are amazingly well-done. There are any number of scenes that would make fantastic posters. As a work of art the movie is impressive just for its visuals and that alone is worth seeing it in the theater.
We got to see it in 3D and this is perhaps the best instance I've seen of 3D in a work of fiction being used in a way that organically is part of the story. Usually, 3D movies are just agonizingly forced with scenes of things flying towards you for no particularly good reason, or characters flying around just so we can see them flying around. The 3D in Avatar feels entirely like they were making this movie and it just happened to be in 3D because they had 3D cameras. There aren't any moments where it feels like what happens happens so they can use the 3D; instead, everything is in 3D in a way that draws you into the scene even when the scene is just people walking through a silent forest. There are certainly moments where 3D adds to the thrill, but they're all scenes that would have been thrilling anyway, and would have fit in perfectly in the 2D version of any action movie.
The movie did run a little long. And some of the characters were just present enough to be tantalizing but not enough to be developed. There's a researcher who seems to have a character arc we only get by catching a few glimpses on his face; maybe more about that arc got left on the cutting room floor. A few characters have changes of heart that seem unexplained or inadequately explained. If I'd been making the movie, I would probably have made the same choices about where to spend the time available, so these criticisms are not that heartfelt. Still, they are worth noting.
Another thing I like about the movie: it does not lend itself to sequels, to becoming a franchise. Not that there isn't going to be one. I am sure they'll find a way. But I bet it'll be disappointing. The transformation of the characters (notably the main character) is the story, and now that it's done, what would the sequel be about? Another parallel transformation of someone else? Or his life after the transformation, lacking what made the first movie special? This is a perfect recipe for the disappointing sequel. (On the other hand, if anyone can take a fantastic but self-contained movie and find a way to make a fantastic sequel, it's the guy who made Aliens and Terminator 2, arguably the two best second-movies-in-a-series in action movie history, both following movies that were conceived and executed as complete-in-one-movie.)
I would strongly suggest any action or science fiction movie fan make sure to see this one in the theater, and ideally with 3D. Seeing this one at home (even on a big HDTV) isn't going to be the same.