First of all, I havn't really used Google reader yet. I think I tried it a long long time ago once, and they apparently did a UI redesign. However, it doesn't work for me anymoe, all I get is "Loading..." (and a Javascript error).

I'm using liferea, and I'm quite happy with it.

Some of the things I do like:

• Folder approach, with grouping - I have less important and more important feeds, and I'd like to read the important stuff first. In fact, I have several feeds I don't really read. For example some (regular) news sites. They have tons of hits, and when I've watched the evening news on the public channels I usually feel well-informed enough to not read them. These folders usually end up with several hundred unread entries, that I don't intend to read.
• Filters; there are some websites I transform using a filter to a feed. Sometimes because the feed sucks (e.g. heise.de) and sometimes because they don't offer a feed (e.g. pixelgirlpresents.com).
• Offline operation. My network here is sometimes unreliable, and I'm happy when I can do things offline, too! Apart from the speed gains.

Because of these I can't imagine using an online reader.

P.S. If you fold your blog entries or don't do full-text RSS, I likely won't read your entries, either. It doesn't work with offline reading habits.