I tried it four times right after it launched earlier in the year and it failed every time. If it fails you get a credit to try again but they only managed to figure out the credit system recently so I have only just been told that I now have them in my account to use.
I have heard several people on TV/radio rave about how good it is so it must work.
I believe the software was developed by Philips and stores a hash of the music and compares a hash of your clip to their store.
edit: No it wasn't developed by Phlips - are/were doing something similar. Here's an article from Aug '02 when it was launched:
http://news.bbc.co.uk/1/hi/entertainment/music/2202830.stm
Gareth