Benefits:
It has a motor octane rating of 104-108, it is also quite cold to the touch. It is currently about 1.99 per gallon, while 91 Octane is approximately 3.30 a gallon. E85 is cleaner burning, emitting a lot less greenhouse gasses. It is also a renewable resource. To top it off it is made 100% within the confines of the USA.

Cons:
It takes more of this fuel to create the same energy as regular gasoline. Therefore your car will use more fuel and you will see a decrease of approximately 10-15% in fuel economy. To make big horsepower you will need more fuel pump and more injector. Many people state that the fuel is corrosive and it could have adverse effects on aluminum fuel rails, injector o-rings and fuel lines. But so far in 9 months of testing we have seen no such side effects.

What do I need?
Opinions on this vary greatly.  Speaking about high performance lower mileage cars you probably don't need to change anything.  You definitely need a way to add a lot of fuel to your tune.  We know that the Walbro 255lph in line pumps work with this fuel.  Any Ford fuel injector seems to work fine.  And so far steel braided hose works fine, we have no data on the aeroquip blue fuel hose.  Generally speaking it would be nice to have teflon coated fuel lines and a fuel tank with a teflon liner, these are the types of mods that the factory does to newer flex fuel vehicles.  It should also be noted that the ethanol will do a super cleansing job on your fuel tank and fuel lines and you should change your fuel filter probably within a week of using this fuel to avoid clogging other parts.  Your lines and tank will have a lot of varnish on them from years of using regular gasoline, the ethanol removes all that varnish.

Test Car
1995 Mustang GT street car, 331 cubic inch, custom twin turbo system with twin T70 p-trims w/ .58 AR, T56 tranny, solid roller: 242/236, .600 lift, AEM Engine Management System.
Fuel System: 3, 255lph Walbro in line fuel pumps, 160# injectors.  We were tuning with an AEM wideband system using a standard gasoline AFR.  We weren't using lamda or other multipliers, just gasoline AFR.
No alky, no nitrous, no ice on the intake, etc.
For more info on the car go here.

The first thing we did was add 40% fuel to the fuel map under WOT. We also added about 20% fuel in part throttle areas. We were tuning using a regular gasoline wideband air fuel ratio of 14:1 at part throttle. On the dyno the car made the best and cleanest power at 12:1.

At 6 psi of boost and 35 degrees total timing the car made 575rwhp from 6000rpm until 7500rpm. The power never fell off. We tried less timing but the car didn’t respond well and the power curve was sloppier. At 13psi and about 29 degrees of timing we made 872rwhp. At 20psi and ~24 degrees of timing we made 989rwhp.
At 30 psi and 20 degrees of timing we ended up with 1066rwhp. The fuel injectors were at 75% duty cycle at this power level. Whereas with gasoline they were at about 55%. The fuel pressure was also slightly falling off at the top. The lack of a large power increase from 20-30psi is due to the tiny exhaust housings on this street car.

In total we made 16 dyno pulls and we never heard any detonation, but we did hit fuel cut a few times during testing. The next day the spark plugs were pulled and there may have been slight detonation in 2 of the cylinders because the porcelain was speckled. However the car still runs fine. This is definitely a very impressive fuel.
I also want to point out how impressed I am with this solid roller setup. Sure it is slightly noisier than my tiny hydro cam. But you can’t argue with that sick power curve. At all boost levels the car makes peak power at 6000rpm and holds it solid until 7500rpm, I am sure it would pull up to 8000rpm no problem. Steve has also tried a larger hydraulic cam to get the same results but it just didn’t work. The cam was a comp extreme energy hyd roller: 248 @ .050 on int and exh, 114 lsa. The car also had larger 74mm turbos at the time but the power would peak at 6500rpm and drop like a rock, even with expensive valve springs. With the new small solid roller cam the car even lugs along at 1500rpm no problem and idles fine at 900rpm.

Click here for a video of the car on the dyno.

Click on this graph for a larger version.

To learn more about E85 and to check for stations in your area please go here:
http://www.eere.energy.gov/afdc/e85toolkit/e85_fuel.html