My girlfriend went this route, and it worked out really well for her. She was able to do her residency in Hawaii for five years with a follow-on assignment in Germany for four years. However, she is totally discouraging me from going the same route for the following reasons:
1) Once you finish with med school, you are at the whim of the military. Due to current combat operations, you will most likely be placed into a General Medical Officer (GMO) slot doing basic medicine. This is before residency. On the upside, if you get a residency out of school, it will pay better than almost anything on the civilian side.
2) Duty locations are also at their whim. On one hand, you may get to live in beautiful Guam. On the other hand...not so beautiful Iraq.
3) Instability. If you are married, committed, or interested in homesteading in a stable location, the military is not the best option. However, if you are young and very flexible, the money can't be beat.