I pretty much use UP for all my DVD purchases, so I kinda use them a lot

(something like 5 to 10 deliveries a month)
My comments:
1) Yes, I highly rate them. Since they are a relatively small company and anime fans, out of all the retailers I've used I've found them to be the most reliable and most helpful. I've heard people call them expensive, but I find their prices comparable to buying something via expedited delivery from Amazon.com, and you don't have to worry about the extra 8 quid hit when your artbox gets stopped by Mr customs man!
2 & 3 already answered above, although I've never actually noticed a R2 on there yet

(I'm not trying hard enough obviously). UP will never sell any bootleg items, the guys there really
really hate the bootleg trade.
4) Hmm, OK, I'll be honest here.
The packaging quality is normally very good, bubble wrapped envelopes for 1 or 2 DVD's, or up to 4 manga, delivery next day. I've only had a couple of instances of product damage this way, which was the Trinity Blood digipak collector editions. UP replaced every damaged item, and also started wrapping the digipaks in protective cardboard as an extra precaution.
For bigger and more expensive purchases, sturdy boxes are used with signed for delivery once it starts getting around 30 quid or over. I've never has any transit damaged items via the boxes.
Regardless of delivery though, I'd say something like 1/10th of the items I get from UP have some form of defect, which I stress is normally manufacture damage (and mostly manga). When I bulk ordered the Negima manga someone was a little too happy with the stanley knife, so some of them have a slight score across the cover (no so much that I'm fussed about it though). I think I'm just unlucky in this respect

Every time I do have a faulty item though, I contact UP and they replace it for me, you have to post it back to them, but they recoup you the postage cost off your next purchase (second class postage rates).
A few other comments:
If you want the best service, pre-order your DVD's and Manga. UP are small so don't keep big stocks of items. If you haven't preordered and its something not in stock, expect to have to wait a few weeks for their next bulk shipment from the wholesalers.
As for figures & models, UP are kinda at the end of the food chain on this so unless its a figure range that gets a lot of models shipped for the western market (e.g. Bome), then you'll find it can be very hit and miss if you ever get a figure. This is the same for pretty much all the western figure trade though, so you just have to live with it
Personally, if it's a figure you really must have then preorder from someone like
HLJ who are in Japan and can source a whole lot better (I recommend shipping via SAL, takes a month to get here but seems to get through customs easier).
So, to sum up, UP get two thumbs up, can't rate em highly enough
