We don't own any of the Bike Friday products but we have test ridden them and have several friends who either own or have owned Tandem Tuesday's and Bike Fridays. Overall consensus is, yeah.... they look funny but they ride quite well. The gearing compensates for the small diameter wheels so that there really isn't much of a compromise in terms of potential performance.
The only negatives I've heard -- aside from aesthetics -- are that given their dimuntive size the tandems still require two suitcases. Assembly of the Tandem Tuesdays (I think it's the Tuesdays that fold) was also cited as a bit more complex than you'd expect. In four cases the folks that we knew who owned these bikes have since sold them and purchased full-size travel tandems equipped with S&S Machine Bicycle Torque Couplings (aka. S&S BTCs or S&S couplings). The least expensive S&S equipped tandems (Burley makes several models) are about $400 to $1000 more than the Tandem Tuesdays. However, at least for these folks, they either opted to use their travel tandem as their full time tandem or had a 26" travel tandem built as a second tandem. Regarding the latter, this gave them an enduro tandem for light off-road use at home or as a touring or off-road tandem away by merely swapping out tires.