TechNet Magazine has a great article this month about UAC.
UAC was not deliberately designed to be the most annoying feature in the history of Windows. Rather, this set of technologies was designed to set us on a path where users do not need to expose their systems to potentially malicious code as frequently as they have during the past few years.
In its current form, UAC will not stop really good attackers, or ones who have the help of really good attackers. If the bad guys can't think of any other way to defeat UAC, they will almost certainly resort to asking the user to do it for them. Given the choice of dancing pigs and security, we know from experience that the dancing pigs win every time. Users have learned to dismiss dialogs, and so they will until we manage to teach them otherwise. This results from many contributing factors, including the fact that there are too many warning dialogs, that the messages in them are useless, and that many of the manuals for whatever devices users buy include a note to "please click yes to the security warning dialog to dismiss it."
UAC does not provide foolproof security. In fact, it makes the good old local privilege elevation attack interesting again. This is a class of attack that has largely been discounted because, on Windows, nearly everyone was an admin anyway so elevating to some other admin was quite pointless. That said, UAC definitely changes the nature of such attacks and transforms the rules of the game to be much more like what prevailed on UNIX for more than 20 years.
I think it's funny that people have been doing so much complaining about it... I have UAC enabled on all my machines and I hardly get ANY dialogs at all. But then again, I don't use many legacy programs, either. Whichever side of the UAC fence you're on, it's a great read.