Although I've never actually put my hands on one, I have run sound for quite a few artists who used the hardware auto-tune stuff. It sounds just like the software (it's just a little computer with a few audio i/o ports that only runs one program, really...).
I think that people love it or hate it for the same reason - it doesn't sound natural when you crank it up to 11. I'm completely apathetic on the matter, however - it's a tool with a distinct purpose - making vocals sound like T-Pain and Cher. For natural-sounding tuning: there's melodyne (and I think the newer Antares stuff might be better at this, too - but they're forever doomed to be known as the robot-sounding-pitch-fixers...)
If you don't actually need to use the thing in live situations, I'd definitely recommend cutting out all the unnecessary cabling, conversions, etc. and just buying the plugin instead.