Oh gosh. Have we turned this into a The Pack Xander vs. Seeing Red Xander thread? I have mixed feelings about that one, myself.
For the most part, I love Xander. He really is "one of the good ones." He's got his flaws, but I'll discuss those in another paragraph; this paragraph is for his virtues. First and foremost, Xander is brave. He takes on the nasty baddies of the world without the benefit of super powers. He's just an average guy, but he doesn't let that stop him. Xander didn't have the best family, the best childhood, the or the best potential. He wasn't one of the smart kids or one of the jocks or rich or well-connected or even talented at playing an instrument. But he still grew up to be the most financially capable and successful of the scoobies. He was a stable, decent, hardworking man. He was living the American dream all on his own and doing a good job of it, too. That's part of what attracted capitalist Anya to him. The other scoobies could have learned a thing or two about elbow grease from him. While he was doing that, he was also Mr. Fix-It to his friends. Xander didn't grow up with much love in his life, but he had the biggest heart of any of the scoobies. He loved them unconditionally. Could you imagine what their lives would have been like without Xander? Not only would the house would have fallen to pieces after a couple of fights, but the world would have ended a couple of times, too. His love and his courage saved the world at least twice -- and that's not counting the effort he put into researching and fighting during other apocalypses. Xander is like the rock or the anchor of the scooby group. He will always be there for them. He will always love them. He will always stand and fight with them. Finally, he will always be good. The darkest evil he has in him is the tendency to doubt himself so much that he wants to spare those he loves from it (Hell's Bells). He's just one of the good ones. He has principles and he stands by them -- and, coincidentally, he's also an average straight guy with a very feminist way of life, if his interactions with his female friends are any indication. He sees Buffy and Willow and Anya as individuals whom he loves and he is unthreatened by the areas in which they outstrip him (and not overly proud about the areas in which he outstrips them). He's who Riley tried and failed to be.
In addition to all of those virtues, Xander also has a laundry list of flaws. That makes his character real and readily accessible rather than some icon of perfection. First and foremost, Xander is insecure. He sees how great everyone else is and because he doesn't have any nifty powers -- because he's just an average guy -- he questions whether or not he deserves anything good. More often than not, those doubts cause him to shoot himself in the foot. He's a scared little boy who never quite grew up. He feels like any success he achieves is fleeting or illusory, and so it often ends up being that way. Really, his biggest flaw is that he doesn't know how great he is. Part of him is still stuck in that persona of the kinda dorky kid with the embarrassingly hick family. These insecurities cause all sorts of negative outgrowths. He is so afraid of being left out or of not getting what he deserves, for instance, that he can be rather selfish at times. He's so afraid of getting hurt that he can be insensitive to others. He's so afraid of hurting others that he can lie or make other bad decisions. He very strongly dislikes people whom he sees as having it "easier" than he does, (like Angel) so he has a tendency to let those negative feelings cloud his judgment. He's prone to saying "I told you so." He's hesitant to accept responsibility when he does wrong, and yet quick to heap blame onto others. For much of the series, he has a narrowly defined worldview and he displays considerable animosity toward anyone or anything that does not fit that worldview. He's led by his passions, so when he is jealous or lusty or angry or something, he has a tendency to let those emotions make him temporarily nasty. Basically, he's human. His struggles are our struggles, and they don't always bring out the rosier, more noble side of his character. Like us, he fails as often as he succeeds. The important thing, I guess, is that he keeps trying.
That's my long-winded take on Xander. I actually find him to be the most easily accessible character. The more I play him in the RPG or write for him in my Wishverse story, the more I like him. He seems very real.