I don't have kids yet, but have considered setting up an account like this when I do. One attractive feature is that if you gift appreciated stock to your kids through this type of account, you can then sell it and take advantage of your kid's lower tax rate up to the kiddie tax exclusion amount ($2k/year). So if you have assets in taxable accounts, you could potentially use this mechanism to avoid $300 of capital gains tax each year, per kid.
The catch, however, is that any money you put into this account becomes property of the child. You (as the custodian) may withdraw some of the money before the child reaches the age of majority, but you must spend that money for the child's benefit. Additionally, most articles I've read about this type of account state that you can't use the money for things that you (as the parent) are required to provide, like food, shelter, and medical care. Using that money for these purposes would essentially be akin to making your minor child pay rent...not allowed. So any money you take out would have to be used for "extras" like summer camp, birthday presents, plane tickets to visit grandparents out of state, etc.
If you do decide to leave the money in the account for college expenses, be aware that this could affect your kid's eligibility for financial aid. This type of account belongs to the child, while 529 accounts generally belong to the parent. The kid's assets are factored into the expected family contribution at a higher rate than the parents' assets, so money in an UTMA account could mean your kid gets less need-based aid than if that same amount of money was in a 529 account.
