I gave one to my niece's 6-year-old daughter last Christmas, after setting it up and running it for a while at my place to be sure everything was OK. It is a nice looking set, runs fine but the tender and cars are a bit lightweight and flimsy for very young children to play with by themselves. I also found a problem that I had somehow missed when I test ran it - I forget the details but something was unscrewing itself and I needed a #1 Philips and a Swiss file to fix it. Of course this was Christmas eve and my nephew-in-law, the kid's father, isn't real big on tools (guess what he's getting for Christmas this year!) Anyhow I finally got it sorted out and all the assorted kids (2 nieces, 2 kids each) loved it, so all's well that ends well.
The Hogwarts is, in my opinion, a better looking train than most starter sets. I paid something like $225 for mine, which was a great deal at the time I bought it. I understand you can get it cheaper now. At what I paid it was excellent value; anything under that is gravy.
For anyone who's giving it to little kids, or to a family that isn't mechanically inclined, I'd be sure to give it a VERY thorough checkout before giving it - don't just wrap the sealed box. For Pat Kelly, who started this thread - the recipient is a teenage Harry Potter fan, it's a nice train and great value for money. I'd go ahead and do it, and just deal with any problems as they arise.