After using it for quite some time, like most such ideas, I find it utterly useless. I use Digg in the following way: I check out the front page and the upcoming Technology section for interesting stories. The recommendation engine merely gets in my way, making me go through a couple of extra clicks to get what I want (whenever Digg doesn't automatically log me in, which is often). The stories that the recommendation engine feeds me seem completely random; standard categorization by topics works way better, and checking only what's recommended feels like I'm missing out on good stories.
In a way, Digg itself is a big recommendation engine: it's a bunch of news stories and links selected by wisdom of crowds. The difference, however, is that Digg doesn't care about my "digging habits;" it doesn't try to guess what I'd like to read, it works as a collective hivemind that decides what it likes by itself. On the other hand, I've encountered many startups which are trying to learn from your web usage patterns and habits, and none of them did anything for me; in fact, the entire idea simply doesn't seem to work, except perhaps for the most casual user who won't notice the difference anyway.