Rock Band 3 is everything I'd want from a new Rock Band. The Key-tar is very good, and all the visuals, menus, and general functionality is improved. Being able to jump in or out of a song, change difficulty, and even change instrument, all while the song is playing, is really cool.
I really enjoy the visuals. The lip syncing is amazingly good, the characters really look like they're singing. My one complaint is the audience members; you'll often see two identical models doing the exact same animation at the same time. It seems like it would have been easy to at least change the colours of their clothing, if nothing else.