I don't put creatine in the same class of supplements as protein powder. Protein powder actual feeds the body whereas I believe creatine is more of a facilitator.
I've used it on occassions, and when I have I have seen reasonable results.
Without looking up the posh names for it all, basically it makes you train longer and harder. I've always worked on the belief that it helped pack in nutrients, especially glycogen(fuel), into the muscle and thus it takes longer for you to get muscular fatigue.
However, I've just done a quick google search and one site stated that the creatine was a type of fuel itself, almost sacrificial if you like, and got used before eating into your bodys reserves.
When it first started being used it was also claimed that it helped hold water in your muscles(making them bigger). Not sure if I believe that though.
Also it was rumoured to put extra stress on your kidneys so it is advisable to drink loads when taking it.
I've just started taking it again, but I've also upped my protein recently. I have seen some improvements in fullness. Weight is currently the same though.