One important caveat about TOR is that you will have a severely limited bandwidth. It is best to not try to download pictures or or large files through TOR as you will not only slow your own browsing down, you will slow down browsing for many users. Especially don't try to torrent on TOR. They explicitly call out that you are not allowed to torrent, so I think they have it blocked (For the most part).
Otherwise using TOR as directed is great. You are anonymous and able to access parts of the internet that are hidden from other people. Very few drawbacks to TOR except those mentioned above.
Yea traditional VPN (The paid kind, not the free) may be better, but you'll have to read up on their rules too as many of them limit or forbid torrenting too (As so many illegal things happen that way). Finding safe ways to torrent is difficult, but they do exist.
Being anonymous is a myth, you are never truly unknown and can always be traced and isolated. It will be difficult for some but not for others specially when they have huge sniffer networks and super computers at their disposal..
Replying to: Geek, you are correct to a point. There is not true anonymity for everything you do. Between checking social websites and being people of habit, it is not difficult to correlate data and figure out who someone is. But the same argument applies to locks on your house (Or a security system for that matter). The locks (Or security system) is not impenetrable (Not even at a bank), but that doesn't mean that you shouldn't do something to at least keep 'honest' people honest (Or in this case lazy people from easily tracking you).