There almost needs to be two separate considerations. From a language standpoint Java is a bit middle of the road. It has some well known pain factors, but more or less it's one of the easier OO languages to master. It's used in a lot of high profile web site.
The VM on the other hand does a lot of interesting things under the covers that make the language quite fast. When JRuby hit the scene it was faster than the core ruby project at quite a few things because the VM was doing all sorts of optimizations behind the scenes. Also, because the Java OP code is so stable with relatively few changes per major release you have a bit of a boom in languages you can run inside the Java VM. You get all the benefits of the R&D Sun and Oracle put into JIT, while retaining the ability to do interesting and contemporary things with your language.
Clojure, Groovy, Scala, Python being the primary languages with another 16 that can compile to Java Op code.
Were Java fails mostly is as a client application, running with some sort of Windows GUI. Sure, you can do it, but it realistically people who do Java Swing apps are writing some sort of thick client that could almost always could run inside a contemporary browser without any plugins.