It's clear the security situation in the predominantly Sunni areas is still bad, but what about the country as a whole? This Time story sheds some light:

Security, which almost all Iraqis say is their major concern, is far better in both the north and south than it is in the capital. Electricity is much more reliable outside Baghdad. There are almost no power cuts in the south, a region that often had six or less hours of electricity a day before the war.

Schools are mostly back to normal, and commerce is booming as goods flood in across the Turkish and Kuwaiti borders. The military presence of the U.S. in the north and the British in the south is far less visible than are the U.S. forces in and around Baghdad. Despite sporadic ambushes, the foreign troops are largely tolerated by locals, who tend to view them as a necessary evil until a viable Iraqi administration is in place.

There are many complaints—about the increase in banditry on the roads, the slow pace of reconstruction, the rise in prices, the shortage of jobs caused in part by the U.S. dissolution of the Iraqi government and army. But when people in the north and the south were asked whether life has improved since the war, the answer, in Arabic, often came automatically: "Tab'an ahsan" ("Of course, better").

This is a good story, which doesn't sugar-coat what's going on in Iraq, but does help to provide some balance to the reporting of the conditions in the country as a whole.