When I starting with Python sometime in 2001, I was briefly frustrated by the intentation-as-block-structure syntax; but after a few weeks I found it natural. Its most obvious advantage is that it avoid the duplication between indentation and braces / keywords. Yet this kind of syntax has not become popular outside of Python.
Today I saw an interesting use of it “in the wild”: HAML, an HTML templating mechanism for Ruby on Rails. I haven’t used HAML (and may not, since at the moment we have only some sample projects using RoR, nothing in production), but from the tutorial it appears to be a very tight (indentation-based) syntax for HTML templating. I’ve encountered a Rubyist or two who disdains the Python syntax – I wonder if that similarity will limit HAML’s adoption.