I'd have to rate this book as one of my all-time favorite SF books. I still freak out a bit if I think too hard about his dust hypothesis.
The best thing about this book is that I read it soon after I had read "The Minds I", a collection of essays about AI and human consciousnes. I suspect that Egan has read the same book, since many of the concepts of Permutation City are based on the thought experiements in The Minds I. This is not to say that Egan's book is not original, as the title suggests, the book is a riff or fugue on a number of concepts related to identity and consciousness.
Most of his wild extrapolations follow perfect logic if you accept the basic premise that a conscious software entity can be created. The idea that, if such an entity exists, maintaining the software state while shutting down the program, then restarting it later from the same state would be experienced by the entity as instantaneous, then following that a succession of these saved states in any chronological order should be perceived as the same experience is mind bending.
Amazon should bundle Permutation City and The Mind's I (and maybe Goedel, Escher, Bach) -- they make a great matched set.