Never used it personally but I've seen reports here on PPRuNe that those who have 'em, love 'em and will not fly without them. And yes, they're based on transponder signals.
There's two variants of them. The more expensive one (forgot the code) can be interfaced with some Garmin GPSs, including the 430, to show all traffic on its (bigger) screen overlaid on the GPS map.
They're NOT a substitute for keeping a good lookout though. There are still airplanes out there without transponders, and even people who switch perfectly servicable transponders off for some reason.