I live in Colonia part time, and sometimes go shopping in Montevideo. At first I loved it, but soon found out that its charms are quickly exhausted. It is a melancholic city, its once beautiful buildings dirty and decaying. There is crime in Montevideo, too - not as bad as in Buenos Aires, but catching up fast.
The rambla is stunning, but there's only so much jogging you can do - restaurants are not very good, and overpriced. All in all, life in Uruguay is about 1/3 more expensive than in Buenos Aires. And I'm talking about rural Colonia, which is cheaper than either Montevideo or Punta del Este.
The good thing about Uruguay is that it is much more stable than Argentina, both politically and economically. It is an expat-friendly place, too: with just a tourist visa I was able to open a bank account, buy property, and register a car.
I like Uruguay, as it nicely counterbalances life in Buenos Aires. However, on a full-time basis it can be stultifying.