I think Etsy is a great site, but here's the only reason I won't open a shop there - it's most frequently viewed by crafty people. Most of us who know how to knit a hat ourselves are not going to pay $30 for a hat someone else knitted. There are so many people who have Etsy shops dedicated to knit and crocheted items, handbags and beaded jewelry that most people who sell such items don't make much money at it. Usually it's the people who have something really unqiue to sell that make the money. My best advice would be to promote your Etsy shop to those outside of crafting circles because they are going to be less inclined to pass up your wares because they feel they could make them themselves.
It is a good avenue, however, for people who want others to truly appreciate their craftwork just be sure to promote the heck out of it. Best of luck to everyone with their Etsy shops.