With another new e-commerce venture I am a partner in, after spending nearly $300 in PayPerClick (in 1 month) with 3 engines: Enhance, Google and 7Search, as well as another $100 with PPC deals at AdBrite and AdEnage networks, I can state that it didn't really work for us. And we managed to bring close to 6,000 visitors in July.
On top of that, I am VERY displeased by AdWords service. Not only it is incredibly confusing, they were always finding reasons and putting our keywords on hold and then disabling them. 3 times I've tried. All failed. I can't stand it anymore.
This was, however, my first PPC experience. I guess you have to really know what you are doing. I thought I did (I did everything by the book and I was generous by targeting popular keywords, as well).
However, it shows that it works for most people and I might have fallen into the "exception" category.
Best,