One significant limitation on LED lighting at the moment is power (ie the amount of light produced). I like my lighting bright, so for example my current desk lamp in my study is a 20W 1200 lumen mains CFL. The brightest LED bulb that I have been able to find with any sort of standard fitting so far is a cool white 5W 300 lumen 240V AC mains LED (from ultraleds.co.uk) with a spotlight (screw) cap. (Note: this bulb seems to cause significant interference on a VHF FM radio about 2m away, unlike the CFLs in the same spotlight lighting strip.)
Note that although the latest round of off-the-shelf LED technology in 2007 is passing the efficiency of CFL at 60lm/W, the theoretical maximum efficiency of lighting is over ten times this, so we have along way to go still! The batch of LED technology in the labs as of mid-2006 is passing 130lm/W, so we can hope for a doubling of light output for the same input power soon for roughly ten times the efficiency of incandescent! And note that LED lamps have no 'warm-up' time, which even new CFLs exhibit.
LED lights, often as drop-in replacements for miniature halogen display lamps, are becoming widely available in the high-street as well as over the Internet, and are passing the efficiency of the best widespread alternative, so we could be on the cusp of a small but well-lit revolution! The main barriers to household use that remain are cost (around 5x/10x that of CFL) and maximum light output (about that of a 25W incandescent for a 5W LED).
The relative cost of LED compared to CFL is probably not as bad as it looks, because the very long lifetime of LED bulbs may well compensate (at several years of continuous operation for LEDs vs maybe 1 or 2 for CFL).
And maximum power? Osram has developed an LED spotlight with output greater than 1000 lumens at about 75lm/W (March 2007), thus competing well with standard domestic incandescents (~60W) and CFL (~17W) in light output, and significantly more efficient than CFL.
Cautionary Tale
A real-life story from 2005 as related by a friend:
An electrician I know was working on a huge house in [the UK] and building control wanted to see x percent of low energy lamps as required by law. The owner then decided to replace all the lamps in the house with LED ones. Apparently it looked good.
For me the problem with them is that the light seems bright, but the light that falls on the surface isn't as bright as you think it is. One of the local wholesalers has a demo of various lighting methods, and they have LED downlighters alongside conventional GU10 lamps. The LED looks bright in comparison to GU10, but the light at the source just isn't.
12V DC Solar Power
The reason that I've taken a special interest in LED lighting is because I'm trying to find efficient low-voltage lighting for my solar power PV project, mainly for a decent desk lamp replacement. The initial light for this project was a 16W caravan-style CFL, which is a little bit flickery and blue for my liking, and which produces noticable heat from its built-in inverter. The initial LED lighting that I now supplement this with is a 3W 180° floodlight white LED meant for car 'modding' fancy lighting effects. It is tiny, but mounted behind my shoulder sheds a noticable light that fills in many dark corners and avoids the feeling of sitting in a candle-lit cave!
I'm looking for a 'warm' white LED next, and I have seen lamps rated up to 9W. However, it seems that the warm white is significantly less efficient than the cool white LED format for now, so I'm still looking...
Update 2007/09/23: I stopped using the 3W LED 'car modding' light as backlighting some time ago, as my warm-white 13W CFL is very comfortable to work by. However, today I noticed that my local lighting shop had in stock on the shelf a 3W white LED MR16 spotlight/lamp and the base to plug it into. I was curious to try the MR16 format, since it seems to be very popular. The light (6000K) quality/colour is OK, though seems to be the same yellow-phosphor-over-blue-LED construction that we don't much like in our kitchen 5W LED spot. This doesn't feel as watery and weak somehow. It does not not seem to provide enough general illumination to work by (ie the lighting angle/cone is very narrow) but in a pinch might do if for some reason I find myself very short of power or the CFL breaks! (On further fiddling to set it up as an indirect uplighter, I think this could just about do as a work light, as I'm using it right now.)
Update 2007/11/07: I have been using the 3W LED MR16 as an uplighter most of the time over the last month or so, particularly later in the evening. Earlier, when the sun has just gone done, I prefer the brighter CFL sometimes. But note that I'm still entirely on solar PV powered lighting, and have not once yet run out of juice!
Update 2008/02/17: I am still mainly using the 3W LED as I have since November, but there are times such as this evening when I go hog wild and use the CFL instead!