Slashdot has a fascinating interview with an American reporter who has been living in Baghdad for several months. While it mostly deal with technical infrastructure issues in Iraq, it provides some fascinating insight into the living conditions there.
Since I have to spend a lot of time convincing my mom that I'm actually a lot safer than she thinks, I know that the US impression of Iraq is way off. The truth is life here is quite normal. The streets are crowded (way too crowded, traffic is a nightmare), shops are filled with new consumer goods. Restaurants are thriving. Schools are open. People go to work, school, hang out with friends. You see the occasional American humvee or tank roll down the street, but other than that, it's hard to tell you're in a country under occupation and a guerilla war. Much of Baghdad seems like a normal, if poor, third world capital. Not too different from what I've seen in Latin America, say. There are wealthy areas, poor areas, kids playing, all that. A few months ago, I would hear a few explosions every night and a lot of gunfire. It became so common that we'd just ignore it. But these days, those things are so rare that we actually pay attention when they happen.