I bought a new 2004 Xterra SE 4WD over 2.5 years ago. I still own it and drive it part-time. So this is a retrospective review. Overall, I'm happy with this Xterra. I've driven to rugged areas and didn't worry about the Xterra being able to get me through. The engine reliability has been perfect. Have had only minor cosmetic and noncritical problems. The Xterra makes you want to roll down the windows and cruise along, which is what I do in mild weather. I drove my Xterra from Oklahoma to Colorado to California and back, just cruising along enjoying the scenery. It was not an uncomfortable trip. I've had more comfortable vehicles but this was a great trip in the Xterra.
The four wheel drive has been fun and proven great in snow and ice. I've driven during winter storms when no one else was on the road. The Xterra has never once slipped or slid in four wheel drive! I've crossed streams and gone into areas I wouldn't have in other vehicles I have owned.
Better gas mileage, which I believe was perhaps partially accomplished with the 2005 and later models.