I have positive and negative experiences to report about being raised with a foreign language.
First the positive: I was born in Los Angeles as the oldest of four children to German parents. Supposedly I spoke only German the first few years of my life. During my school years, with each additional sibling and my parents'improved English ability we spoke less and less German at home to the point that as a teenager our household language was English only. I remember being ashamed of my German mistakes (I realize today that my parents then and now still speak an abhorable German with grammatical mistakes stemming from Plattdeutsch) and not wanting to respond in English when spoken to in German. However, due to childhood trips to Germany and a number of other measures ("Deutsche Schule" on Saturday mornings, German minor in college, one year spent abroad in Saarbrücken) my German is today just about accent-free. I guess you could say that I was raised bilingually and that it paid off. At the risk of sounding overconfident, I would also say that the early exposure to a foreign language combined with a general talent for languages make it relatively easy for me to learn additional foreign languages. So much for the success story.
I was adament about raising my daughters here in Germany bilingually as well. My husband is German and we speak German only with eath other. In the region I live in, spoken English is very seldomly heard in public. There are a few Brits stationed in a nearby city, but I have no personal contact with any Americans here. When our first daughter was an infant (now almost 12) I felt uncomfortable speaking English to her in public (at the market, doctor's office, in the elevator) because I was instantly the object of so much attention and ended having to tell my whole life story every time. As a consequence, I slowly realized that I wasn't speaking to her at all any more in public. Furthermore, at home with her Dad, the neighbors, our German friends, etc. we were always speaking German. The little amount of time that was alone with my daughter and speaking English with her did not seem to get us very far. Her general language ability among a number of other developmental milestones, was late. The German she was learning from my babysitting inlaws (I went back to work when she was one) was an awful, incorrect Baby-German. On top of that my husband is generally "schweigsam". At some point I thought, well if she is growing up in Germany, then she at least needs to speak German well, even if I am the one she'll be getting it from. There were other factors as well made me resign in my bilingual efforts: some friends as well as the Kindergarten Erzieherin telling me: "Deine Tochter will genau so sein wie andere Kinder auch, tue ihr das nicht an". The child psychologist saying "normalerweise sind Kinder mit der zweisprachigen Erziehung nicht überfordert, Ihre Tochter könnte eine Ausnahme sein". Another personal "problem": because I am so comfortable speaking German, I have no tendency to prefer speaking English, unless with someone who is an American native speaker. Every English-language conversation I had with my daughters felt like a school lesson, rather than spontaneous, natural, emotional talk.
With daughter No. 2 (now 9), I took on a somewhat different strategy ("Die Missgönner können mich alle mal ...ich ziehe das jetzt durch"). I took three whole years Erziehungsurlaub to be with the kids. With language, it's not only about quality but also about quantity. I read to them in English a lot, explained what they didn't understand. However when Daughter No. 2 entered Kindergarten at age 3 she abruptly refused to speak English. She screamed "Sag' es auf Deutsch, ich verstehe das nicht..."
The story as it now stands: The oldest understands quite a bit, and although at school she needs to struggle in most subjects, she gets good grades in English. I am able to help her considerably (not the case in physics!!). Her 5-week trip (alone!) to her grandparents and uncles in Los Angeles at age 9 really improved her English. Our recent family trip did NOT because she spent a lot of time with us, her parents, and with her sister speaking German. Daughter No. 2 understands less and in 4th grade still does not feel any need to speak English. I don't think she can draw on those first three English-speaking years.
Anyhow, I am quite envious and am full of regret when I hear all those bilingual success stories and wasn't able to pull it off 100% myself. I guess "besser als gar nichts" sums up what I was able to offer my kids.
I would nevertheless encourage two-language families to give it a try. If both parents speak the foreign language with one another it is a definite advantage, even more so if you speak this language with other friends or family members as well.
OK, sorry this got so long....