I don't remember if mine was on or off by default, but It was one of the first things I made sure was enabled when setting up my new computer with Tiger, and I always leave it on.

The OS X firewall seems to work flawlessly. I've never had a single issue with it. I've never needed to open ports or anything. I've tried creating open ports for my P2P apps, but my connection speeds weren't affected at all, so I went back to the default settings.