To some, it is the embodiment of a mature, healthy nation which tollerates cannabis because it can accept alternative lifestyles.
To others, it is a drug-ridden society which encourages serious addiction and all its related social ills.
So what is the real picture?
The law
Since 1976, drug law in the Netherlands has divided drugs between hard (eg heroin, cocaine and ecstasy) and soft (cannabis).
Possession of a small amount (less than 30 grammes) of cannabis for personal use carries only a minor punishment, and is rarely prosecuted anyway.
More famously, the law also allows for "coffee shops".
These are the 1,500 or so cafés - usually small, independent and unlicensed - which sell cannabis, under very strict conditions (the sale technically remains an offence):
They are meant to be a place where users can take soft drugs safely, thus breaking the link with the criminal underworld associated with stronger drugs.
Policy on coffee shops is largely decided at local level, between a triangle of local authorities, the police and public prosecutors.
The hard drugs question
Anti-drug campaigners frequently cite the "stepping-stone hypothesis" when they argue against decriminalisation - ie, that allowing cannabis encourages harder drugs.
But Benno Brugdink, a spokesman for the Ministry of Health, Welfare and Sport (VWS), which co-ordinates Dutch drugs policy, says there is "no evidence" that one has led to the other in the Netherlands.
This appears to be confirmed by the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), which says figures in the Netherlands reflect wider trends in western Europe generally.
Netherlands example penalties
Import/export of hard drugs: up to 12 years' imprisonment and/or 100,000 Dutch guilders fine (about £27,700)
Possession of less than 30g soft drugs for personal use: up to 1 month's imprisonment and/or 5,000 Dutch guilders fine (about £1,385)
Although reluctant to compare figures directly, it says that in general, the problem of hard drug use is biggest in Italy, Luxembourg and the UK, and lowest in Germany, Austria, Finland and Sweden, with the Netherlands somewhere in the middle.
Drug deaths are highest in Ireland, followed by Greece and Austria, with the Netherlands again mid-league, just behind the UK.
The Dutch authorities also point out that hard drugs are as illegal as they are in the UK, and prosecuted just as vigorously - as are the offences of supply and trafficking.
Drug tourism
The Dutch authorities admit decriminalisation has, however, brought some problems in its wake - not least, that of drug tourism.
This is where tourists take cannabis home - in other words, smuggle it - and is a problem not for the Netherlands itself, but for the countries from where the tourists hail. The Dutch are starting to fight this, however.
A few years ago, the maximum amount a coffee shop could sell to any one person was reduced from 30g to the present level.
Mr Brugdink says the numbers of coffee shops are now being reduced so that they fulfil "local demand" only.
And the country has also been improving international co-operation on the issue, introducing more measures such as checks at airports and motorways.
Drug-related crime
The Netherlands' policy is aimed at providing a safe environment for cannabis users and breaking the link between drugs and crime.
But it has found drug-related crime in general - such as burglary to pay for drugs - stubbornly refuses to go away.
Adults who have tried cannabis
Denmark 30%+
UK 20%+
Spain 20%+
Netherlands 15%+
France 15%+
Germany 10%+
Greece 10%+
Sweden 10%+
Finland 10%+
Belgium -10%
Germany -10%
source: EMCDDA
Moreover, the coffee shops themselves have brought "nuisances", such as litter, noise and falling prices for nearby property.
However, VWS says the latter problem is comparable to that caused by normal licensed bars, or areas where tourists congregate.
"Tourists are always noisy," says Mr Brugdink. "The coffee shops bring no extra trouble like that."
And he points out that local authorities can close down any shop as soon as they feel it is becoming undesirable.
Smuggling
Anti-drug campaigners argue that the Netherlands has become a major port and trade route through which international smugglers reach other European countries. Dutch authorities admit that drug seizures in recent years have risen, especially for heroin - seizures of which doubled between 1997 and 1998, for example.
But Mr Brugdink says this is mainly because of the Netherlands' general trading and port status, not because of its drugs policy.
"We have no ambition to be a major port or exporter of drugs to Europe," he says.
"But if you are one of the main countries for trade, it is bound to happen. If you have the biggest port in the world, you are also going to have some of the worst drug smuggling."
The Dutch authorities are at pains to point out that the main part of their drugs policy is not, as many Britons would assume, its coffee shops.
To the Netherlands, most important are its prevention schemes, such as anti-drugs education projects, and medical care and rehabilitation schemes for addicts.
"If you compare our policies with those of countries at the other end of the spectrum, like Sweden for example, the results are more or less the same," says Mr Brugdink. "But the health of ours is better."