Bought one on a whim yesterday to replace my dependable but failing 1st generation graphite airport, and I think I'm going to have to return it. While the streaming music is a fantastic feature, it just doesn't fit into my network as a Graphite replacement. Currently my one ethernet port graphite distributes it's IP signal over the Airport and the Local lan, however the Express only distributes it's signal over the Airport, making the Express not a replacement for the Graphite, but an addition, and basically a waste.

From the FAQ which I always read after I've messed up:

Question: Since AirPort Express only has one Ethernet port, does it act as a LAN port, WAN port, or both? Answer: Depending on how you have it set up, the Ethernet port can function as a LAN port (defined as either simple bridging or sharing your Internet connection via network address translation) or a WAN port (connecting to your broadband Internet service provider or upstream router). However, it never acts as both simultaneously in the way that the original AirPort Base Station (Graphite) can. When the AirPort Express is using network address translation, the Ethernet port acts as a WAN port. When it is set up as a WDS remote station, it can act as a LAN port. Assuming that your Internet service provider only gives you one IP address (the most common scenario for homes), this means that AirPort Express can only accommodate wired clients when acting as a WDS remote base station or bridge. Therefore, if you need to support wired clients and only want to get one base station, you should get the AirPort Extreme Base Station instead