There is a knowledge of Conan Doyle's work here that is wonderful to behold. Watson walks with a limp from his war wound, there are details all over 221B that are from various stories, Holmes's proclivity for disguises is well used, and Holmes's deductions are nicely shown (particularly in both a scene with Watson's fiancée and in two fist fights). Plus we get his ability with singlesticks and skill as a boxer and a swordsman (all mentioned by Watson in A Study in Scarlet).
That last points up to the one thing this adaptation makes use of that's all over Conan Doyle and utterly missing from most adaptations: Holmes and Watson were as much about the physical as they were the mental. There's violence and gunplay all over the place, not just deductions made in a drawing-room while smoking a pipe.
Downey beautifully embodies Holmes's inability to function as a normal person, and his desperate need for a case to engage him -- that last being the important part, as most cases are beneath him.
And, of course, the "magic" plot all has elementary explanations, all of which Holmes is able to figure out by the time the credits roll.
One big diversion is that Watson is more capable than Conan Doyle had him be (he actually makes a couple of successful deductions and suppositions, which is a couple more than Conan Doyle ever let him have), and this Watson also says many things that you always wanted Watson to say. Having said that, Watson's devotion to Holmes is in full effect, and Law and Downey have letter-perfect chemistry together.
Also Watson's wife -- who was little more than a cipher on those occasions when Conan Doyle even remembered she existed -- had more character here than she did in all her appearances on the page combined.
The film's biggest misstep is the unnecessary inclusion of Irene Adler and Professor Moriarty, the former because it's a Hollywood movie and therefore must have a love interest, the latter to set up the sequel. You could excise them from the film and it wouldn't change the story one whit. It doesn't help that Adler and Moriarty are the most overused characters in non-Conan Doyle Holmes stories, or that Rachel McAdams does nothing to convey Adler's brilliance and skill -- she's consistently acted off the screen by the far superior Downey and Law.
(I also utterly despise the Moriarty character, an absurd contrivance to allow Conan Doyle to divest himself of his literary albatross. The character is ridiculous and unconvincing, and "The Final Problem" is quite possibly the worst story ever written in the English language.)
The costumes and sets are magnificent, the pacing exactly as good as you'd expect from the director of Snatch and Lock, Stock, and Two Smoking Barrels, and it's very true to Conan Doyle, as I said.
(Having said that, it's real easy to be consistent with the canon of Holmes, considering that that canon is fairly inconsistent. Conan Doyle really didn't pay attention to details (ironic, given his main character). Watson's war wound changed location (as did his first name a few times), Holmes's attitudes toward any number of things altered depending on the needs of the story, and often the internal dating of stories didn't track.)
Anyhow, fun movie. Go see it!