AT,
I've spent a good deal of time on mil deployments in Panama, flying all over C and S America; what you're reading from everyone is spot on. It's a great place to be.
The cost of living is still relatively cheap, though rising fast, and the food is amazing. The tropical climate makes for interesting flying around 1pm every day, but the countryside is beautiful. It's also got great topography, with beaches, rainforests, jungles, and mountains, all within two hours of Panama City. I won't even mention the bordering countries, but they're also lovely.
As with any small Latin American nation, poverty is there. Nothing as startling as India or Bangladesh, but poor nonetheless. Thus, there are some places you won't want to drive through. When last I was there, we selected restaurants based on the number of armed guards they could afford...
All in all, a wonderful experience. Friendly people, great food, good weather, and less expensive than the U.S., Europe, or SE Asia. Best of luck, let us know how it turns out! Feel free to PM if you've got other questions.
Cheers,
V