According to the Rough Guide, the price of a Soft Sleeper on the train (example pictured below) is about the same as a flight. I'm really tempted to fly in order to see more in the 3 weeks we'll be there, perhaps taking the train just once or twice. I have to confess that the main problems with the train is the toilets. From what I've learned, it's a case of 'first up, best dressed' - the soft sleepers don't have their own toilets, and if you want to be more sure of a clean start to the day, you need to get there first. Otherwise, all bets are off.
It wouldn't be a big deal for me if I were traveling on my own, but with wife and kids, the levels to which I'm prepared to descend are limited.
There's also the consideration of time saved. Instead of a 12 hour overnight trip to Xian from Beijing, for example, we're talking about a 2 hour flight. Perhaps a mix would be best - sticking with the train where I'm fairly sure the quality and cleanliness is likely to be high.