We actually have an older version of this toy that we have had for 5 years (since my older son was a baby) and we recently got this one as a gift for my younger son. And let me tell you, during all the playgroups I've had here and all the babies and kids that have been through this house, this toy is ALWAYS a favorite. Even after they figure it out, the babies just love it (and so do the toddlers!) I'm actually buying it for my 1-year old niece, too, b/c even with the hundreds of other toys in our house, it really is still such a favorite with everybody.
My daughter got this for her first birthday over two months ago, and it's quickly become her favorite toy! She had a little trouble putting the balls in at first, but it didn't take long for her to figure out how to push them through the holes on the top. Now she thinks it's really fun. She hasn't gotten the concept of the hammer yet, but she'll entertain herself with that in her own way. Another positive: there are screws so you can take it apart should your little one put things other than balls down the holes. :-) A great birthday gift!