BlueJ is an integrated development environment (IDE) for Java development specifically created for educational use. It is an outgrowth of the Blue programming language project. Blue was created as an educational programming language, like Pascal, but with an object-oriented focus. Part of the project was the creation of a programming environment for beginning programmers.
BlueJ does the same for Java. It gives a graphical representation of classes and objects in the student's program. It also allows editing and interaction with the program constructs through both graphics and text.
The IDE is clean and straightforward. It's possible to get right to work without spending a lot of class time on the IDE itself, or spending time outside of class configuring the IDE (which is my experience in trying to use Eclipse and NetBeans. They're great for more experienced programmers, but not so great for beginners, especially in the classroom, unless heavily configured first.)
BlueJ's graphical mapping features are fantastic. They make it very easy to visualize subjects of discussion in class, and they make the whole object paradigm make more sense to beginners. I was concerned that they would form a crutch that would keep the students from being able to work with objects and classes without the graphics. This hasn't been a problem for me in actual use, however.
My only complaint about BlueJ is that it's tied to Java. I would like to be able to use it on the parts of my class that don't use Java, particularly with HTML/CSS. However, it's easy to change from another simple IDE that does handle HTML/CSS (like Arachnophilia) to BlueJ.
Among the things I particularly like about BlueJ is how nicely it ties documentation into the development process. Getting new students to take advantage of Java's documentation is frequently a hurdle. BlueJ ties in documentation, both the standard documentation and the use of documentation within program comments, from the very start. Having students write their own documentation as they go, and seeing how it ties upward into the standard documentation makes this all very easy.
I haven't used the Objects First book for BlueJ in my class, I have only used BlueJ with other texts, including Beginning Programming in Java for the Absolute Beginner. This hasn't been a problem at all, though. I also haven't made much use of the resources available through the BlueJ site, but since I am considering teaching without a text, using only my own material and material available online in this upcoming year, that will probably change.
BlueJ is simple, clean, and magnificently tuned. It's a joy to use in class, particularly in a mixed platform lab. If you teach introductory programming courses, I highly recommend it.