Sonia Sotomayor maybe isn't the best of all possible choices when the Supreme Court is heavily slanted towards the Scalia wing, but she's pretty good in absolute terms. I've heard reservations about her attitude towards church-state issues, and that could be an issue, but overall she seems like a very solid choice. (In fact, it does seem Obama went out of his way to pick someone with a long track record -- what he said in his introduction speech seems to bear out on examination.)
Of course, as Amanda on Pandagon pointed out, the wingnut world is reacting predictably, calling Sotomayor an affirmative action appointee. Now here's a question -- is there anyone n0n-white that Obama could have appointed that wouldn't get that label? Of course not.
On Prop 8: it sucks. It was probably a legally correct decision, and at least the California Supreme Court refused to void the marriages already performed. But good lord does it suck. Best of luck to the CA LGBT community on the 2010 election.