Some athletes do not particularly enjoy training on the treadmill as it mitigates the stimulus, the fresh air and even the social aspects of running outdoors. However, it is a valuable tool that can be used in a variety of ways to improve your running.
The first thing to note is that not all treadmills are created equally. Many commercial-grade treadmills perform such a good job of reducing impact forces, that I consider the treadmill a soft surface similar to a trail or crushed gravel. If you are in the market for a treadmill and consider yourself a career runner, I suggest biting the bullet and purchasing a quality treadmill. A used commercial treadmill is often preferable to a new home-grade model in my opinion. Commercial treadmills have stronger motors, rollers, frames, belts, superior impact absorption, and are generally designed for years of constant use and abuse. They are also quieter.
The length of the deck is an important feature, especially if you are a tall runner. I recommend a deck length of at least 60 inches. Most of the variations within a model line are electronics, audio/televisions, and features; in other words, more things to break. Look for a DC motor and a low maintenance deck such as a wax impregnated deck. Some stores specialize in selling used equipment, and may even offer a warranty on refurbished/pre-owned models.
I am often asked how running on a treadmill differs from running outdoors, or how running mechanics are modified on the treadmill. This is debated and there are definite differences, but the best answer I usually give is "slightly." The moving belt causes a slightly different muscle recruitment pattern compared to outdoor running, particularly in the hip flexors. Putting the treadmill on a one or two percent grade will more closely approximate outdoor running and outdoor wind resistance. In comparing video files from hundreds of runners, both on the treadmill and outdoors, I have found that most of the same mechanical traits and form (such as posture, arm motion, gait patterns, shoulder rotation and vertical travel) are present in both conditions.
The treadmill is actually a great place to address economy in a controlled environment, and it is easy to capture motion from 360 degrees. Another advantage is that the moving belt creates a level of consistency that makes it easy to identify asymmetry in gait and stride. For example: simply listening to footfalls can indicate a short stride on one side, or an athlete that is weighting one leg over the other in compensation for an injury. It is also easy to time stride rate using a metronome and to work on rhythm.
This consistency of the treadmill applies to speed and grade as well. You would be hard pressed to find a perfectly consistent surface outdoors, or a hill that has a steady grade for any given distance. The treadmill offers a key advantage for hill repeat training in that downhill running is not required. Downhill running, especially at speed, involves the most impact and damaging eccentric contractions, and can be very hard on the knees. If you have a history of injury or are trying to mitigate impact forces, you can attain a quality and controlled strength endurance workout without the downhill stress.
For athletes performing high intensity intervals and tempo work, the treadmill offers some benefit over outdoor training. The feedback received on a treadmill is real time, and a specific speed/pace can be dialed in. I find that athletes tend to challenge themselves a bit more on the treadmill, and are often surprised at how fast they are able to run with a forced pace. Because heart rate-based training is affected environmentally by heat, humidity, and state of hydration, workouts can be prescribed more accurately using pace. Pacing via mile splits or track workouts are more reactive. The treadmill forces you to be on the pace all the time and offers a unique challenge. You also do not have the constant tight inside turns of track repetitions.
It is important to note that your body cools itself mainly through sweat evaporation and running on a treadmill in a warm environment can lead to overheating. Make sure you have adequate air flow coming toward you, preferably in the form of a large fan.
I don't recommend performing speed work on the treadmill. Speed work involves rapid acceleration/deceleration that cannot be duplicated on the treadmill. For speed workouts under 400 meters, I recommend the track or road.
The treadmill offers an advantage in convenience (weather is not a factor), perhaps safety (depending on where you run) and even privacy, but should not be the exclusive mode for a performance runner. Certain workouts may be better performed on the treadmill, but it should not be a complete substitute or replacement for outdoor running. If you have an upcoming road race, your body will need to acclimate to the harder surface and different muscle recruitment that occurs on the road. A trail race requires lower leg stability and strength over road racing, and that cannot be developed to any extent on the treadmill. In general I do not recommend more than 30 to 40 percent of training occur on the treadmill. Think of it as an effective tool in your training toolbox; useful, but by no means exclusive.