Steve Krause has written an incredibly articulate and thoughtful piece about Pandora and last.fm.
This is a topic that's near and dear to my heart (of course) and while a number of folks have had interesting things to say about how our service compares with last.fm, I think this is my favorite of the bunch. Highly recommended reading.
We've just pushed out a big Pandora release, so I've been very caught up in all of the logistics around that, and have been kind of on the sidelines of this entire conversation. That's probably for the best; it's been fascinating to watch and learn from the passions that are fueling the discussion.
Suffice to say that while I'm the CTO at Pandora, I'm also a fan of what the gang at last.fm are doing. I'm a paying last.fm subscriber and I maintain a musical profile there. I think it's great stuff and, at least in my case, the two services scratch very different itches.