We had a fantastic time at Medieval Times recently. Admittedly, my expectations weren't that high but they were met, and then some.
We had front-row seats which probably helped a bit to make us feel like we're part of the action, but in my opinion most of the seats in the arena would be decent seats since there really aren't that many rows (I think there's 4, maybe 5 rows of seats). The only exception may be the seats right in the corners, at the back.
I was quite surprised to see the "knights" duke it out with what appeared to be real (or at least, real metal) swords. Plus, the knight's lances actually splintered during jousting as it connected with the shields of their opponents. Nice!
The story-line is a little "cheesy" as others have noted, but it somehow fits with the overall experience.
We got our tickets at a discount (they frequently have specials so look out for half-price deals, etc.) and all in all, it was money well spent.