How good are the open-source Nvidia drivers (Nouveau)?

I learned that Ubuntu 11.10 would come with Open-source Nvidia drivers by default. I have an Nvidia 9600M GT graphics card and have always had to install the proprietary Nvidia drivers after installing Ubuntu. I would love to have it pre-installed in form of this open-source driver. However, i wonder if it is on par, in terms of performance with 3d intensive applications such as games with its Proprietary counterpart

No, it's not on par with the binary drivers from Nvidia, which shouldn't be surprising as it initially was a replacement for the old -nv driver.

See this Phoronix article for some numbers.

Having used those drivers with that very card in my laptop, I'm sorry to inform you that you won't be playing Xotonic and Urban terror with it. It might be possible to (experimentally) enable 3D support, but you would be disappointed for now. However, 2D performance is great, and you can get some slick output on your ttys thanks to Kernel mode setting (which also made it boot faster woo hoo)...

But stick with the proprietary drivers for now.