Pros
I've been at Microsoft a number of years, and worked at 3-4 different places before Microsoft. I can honestly say that the people at Microsoft are the smartest, most wide-ranging in their talents and interests, and most inspiring people I've ever worked with. This place is just full of Type A people who have excelled at school, startups, sports, music, and life in general. It can be a little humbling at times, but it creates a really exceptional mix where you can do your best work and stretch yourself and learn something new every week. The company obviously went through a bit of a dry spell, with the difficulties in getting Vista out the door and the mixed response to Vista, and the company's well-documented shortcomings in tablets and mobile devices. But it looks like the company is really turning things around now, with a rock-solid Windows 7 release 2.5 years ago, strong industry buzz around Windows 8, growing enthusiasm for Windows Phone, Xbox and Kinect beating Wii and PlayStation, stock price up 20% over the past 3 months, etc, etc. So one of the best reasons to work at Microsoft right now is that the company definitely feels resurgent -- feels like we are getting a little spring in our step, and breaking through in some key areas that will be critical for future growth. Beyond that, there are all the usuals -- great pay, great health care, great amenities, great quality of life in Seattle, company is focused on staying lean and nimble, etc, etc...
Cons
The Seattle location can sometimes make it tough, when so much of the industry and media attention is Valley-centric. Every group is so empowered and focused on its goals that it's sometimes hard to get cross-company collaboration on a project. The recent changes in the employee review and compensation process make me a little worried that we could be moving toward an every man for himself culture if they don't fine-tune some of the rough edges over the next year or two. Apple, Google, Facebook get a lot more buzz than Microsoft -- will be interesting to see if that changes over the next 1-2 years...