The Xoom (and tablets in general) can be used for a lot of things. I use my tablet for web surfing (including e-mail), reading books, playing games, watching videos, controlling my PC remotely, and as a nightlight.
I don’t use it much for work since my phone is handier (both my tablet and phone run Android, as does your Xoom) but it’s about half the size of my HP-48G calculator, so I got the app. It also comes in handy for reading Machinery’s Handbook: 29th edition which is nice because the dead-tree edition is 2,800 pages (worse than two Neal Stephenson books!), so having the e-book version saves space.
At home, I have three shelves worth of RPG rulebooks, but I also have PDF versions of them in my tablet. Which would you rather carry; a Xoom, or an entire bookcase?
As for recommended apps, there are very few that I use that have universal appeal. One of the few that does is Lookout because anti-virus programs are a good thing to have on any device, and Lookout is the most well-regarded.
The app I use most is ezPDF Reader Pro, which is THE best PDF reader app available for Android. I’ve tried a lot and they are all slow, unpolished, and lack features compared to this gem. If you plan on reading PDF files, you need this one! You probably already deal with PDF files without even knowing it as that is the format that many places use to present info. Hell, some computer makers no longer print hardcopy manuals; they give you a PDF-file for a manual!.
For viewing videos, I like Meridian for it’s buttonless gesture-based controls, though I am warming up to MoboPlayer, but music is better handled with DoubleTwist.
I find the biggest advantage is that is is smaller and lighter than my laptop. Sometimes my Toshiba is just overkill and not worth carrying around, but my tablet is small/light enough to carry without issue and perfectly sufficient much of the time. I use my tablet every day.