Never been to Sturgis, but used to live a couple hours south of there. As far as hotel bookings, you have to book WAY in advance, like a year or maybe even more; they get snapped up quick! I suspect the same is true of bike rentals. On the plus side, there's a lot of small towns, and at least one larger one, at least by South Dakota standards (Rapid City) within a reasonable distance, with better liklihood of finding a room. But since it's so popular, this is indeed the time to start planning for the 2011 rally.
I've heard both good and bad about it also; like was posted earlier, it just depends on who and where you accociate with. Kinda like the rest of life!