Are they a gimmick, work "meh", or extremely functional? Any experience with them?
I ride internal gear hubs (IGH) only, because they are extremely functional. I definitely prefer them over any deraileur system.
Why? Because IGHs have much better shifting than chain-shifts:
Ever stopped at the lights with your chain-shift in the wrong gear? Well, duh, you'll have to accelerate with the wrong gear in place. Not so with IGHs: You select the new gear, move your pedals back and forth once (only the pedals, not the bike!), it says "click", and you are ready to rock.
Ever found you needed to shift a gear lower on a steep ascend, and didn't have much speed to spare for the shifting? With an IGH, you select the lower gear, you release the pressure from the pedals for a split second (and I really mean "split", like a quarter second, or so), it says "click", and you are in the correct gear again. No need to reduce force until the chain has fully moved to the correct sprocket.
On a similar note, when you shift up during acceleration, IGHs virtually eliminate the shifting breaks in power output. It feels like driving a tip-tronic car over a manual shift car. Once you are used to the "click-click" shifting performance, you won't want to go back to deraileurs.
The downsides of IGHs compared to chain-shifts are:
They are a tad less efficient. That's why racers never use IGHs, they need the last percent of performance. However, that's definitely not an argument for commuting and touring.
The spread of gears is a bit more limited. IGHs usually span a factor of approximately 3 between lowest and highest gears, chain-shifts for mountain bikes have a much higher range. I.e. on steep slopes you may find that you are missing a gear or two with an IGH. But it's still much better than having only one gear, isn't it?
After getting some experience with a Rohloff Speedhub, I feel that I must mention that it deviates from my description above in some points:
Shifting is not deferred, it takes exactly as long as you need to turn the controlling grip into the new position. This also works under some load, but the more pressure you have on your pedals, the harder it becomes to turn the grip.
Efficiency is significantly higher than with cheaper IGHs I've ridden.
Gear spread is significantly wider. Most other IGHs max out at roughly 300% spread, the Rohloff gives 500% spread.
There are other top category products that I have not tested, and which also deviate significantly. Most importantly the NuVinci which does not even have gears, it can produce any transmission factor over its entire range. I imagine that this can be a very sweet feature, and I did consider it for my investment. In the end, I decided that a high gear spread was more important to me than continuous shifting.
Of course, the Rohloff is the most expensive product in the market, so you must decide for yourself whether the above is worth the investment of a little more than thousand Euros. Cheap second hand IGHs may be obtained for 25 Euros, and they are already a very good choice. So, if you are on a tight budget, take something like the SRAM 7-Speed, and be happy with it. You should only consider the top products if the money is not really the issue. But if you decide to invest the extra money, I have found that it was indeed worth it. In my case, I mostly enjoy the higher efficiency and the small increment between the gears.