I have an original POD 1.0 and the Korg Ampworks. I like the Ampworks a little more than the POD, to my ears its tone is a little better, especially on the "Fender" and "Vox" type sounds (for the Marshall tones, I think the POD nails them better). I do a little 4-track recording with them but mostly just do a lot of late-night playing through headphones with them.
I also use the Ampworks as a pre-amp for my Pignose a lot, a set-up which sounds great played in stereo with my Vox DA-5 amp. Korg is owned by Vox, and for the Vox DA-5 amp, they more-or-less just simplified the Ampworks features some and built them into the amp...with the Ampworks modeling though, you have the options for different "head" sounds and different "cabinet" sounds, and that really makes a difference. Neither the Da-5 or the POD 1.0 gives you the option to switch "heads" and "cabs" and you can really get some nice different sounds that way.
I wish the modelers gave you more control over effects...many effects you cannot combine. With the Korg Ampworks, you can't combine reverb and trem for example, which is frustrating because you can get a pretty good fender tone and I like to play a lot of surf-type stuff. They corrected this on the DA-5, they have a combined reverb/trem setting but unforthunately the Fender tones aren't quite as "there" as they are on the Ampworks.
In general though I agree that pedals sound better than modellers, especially the higher-end pedals through a good amp - But modellers are sure convenient and give you a lot of bang for the buck.
Electrics: Epiphone Les Paul Standard (w/S.D. pups - JB-4/bridge, SH-'59 neck), Fender Fat Strat (Mexican), Squier Fat Tele, Squier '51, Agile Valkyrie III, Ibanez Artcore AF75, Washburn OS OE30 Delta King, Dean Vendetta XM (w/ Dimarzios, D-Sonic/bridge, Air Norton/neck), Silvertone archtop (late 60s/early 70s), Titan EG-1 strat, Gibson G-3 bass, Fullerton strat
Acoustics: Sigma DM-5 (Japanese), Silvertone archtop (early 50s), Yamaha FG-110 (Korean), Alvarez RD20 12 string, Silvertone (60s)
Amps: Alamo Capri (early 60s tube), Alamo Challenger (late 60s tube) Epiphone Valve Jr. Head (w/Peavey 1x10 cab & Realistic 2x6 cab), Fender Yale Reverb, Vox Pathfinder 15R, Marshall Lead 12, Behringer G110 V-Tone, Marshall MG15CD, Vox DA-5, Pignose 7-100, Marshall Bass 12