In regards to the issue itself; from a purely practical standpoint, allowing homosexuals to serve openly (open being key, because there are many of them serving in our armed forces as it is) hasn't seem to have had any deleterious effect on any military in which it has been allowed, most recently being the armed forces of the United Kingdom.
In regards to Gen. Pace, I certainly feel he has the right to express and hold any opinion he wishes. Of course given the nature of his position, it is very difficult to say this is purely a personal opinion and should be taken as such, as his position gives him significant say in military policy.
I give him credit for not wavering in the face of the political correctness nazis, even if I disagree with his position.
Edit: Reading his comments in full makes me curious as to the adultery business, how common are discharges in the armed forces for such marital indiscretions?