There has been a tremendous amount of controversy relating to the Shadow talent builds for priests.  This is because, depending on gear and talent spec, a priest can either become one of the most powerful damage dealer in the game, or the most powerful healer in the game.  Most people realize this truth, but few realize why.

Priest’s shadow spells deal mediocre to poor damage. For instance, the most powerful Mind Blast deals only about 500 damage.  The most powerful mage pyroblast deals 800 damage immediately, with another 268 over twelve seconds. Another good point of comparison is the Shadow Priest’s standard damage spell, Mind Flay, which 426 damage over 3 seconds. This is roughly half the damage that a mages fireball deals (up to 790 damage).

A shadow priest becomes powerful through the three modifiers that they can put talent points in: Shadow Weaving, Darkness, and Shadow Form. Combined, these provide a 45% buff to the damage done by the shadow priest.
 

((Base Damage x (1 + Darkness Modifier) + Spell Power) x (1 + Shadow Weaving Modifier) x (1+Shadow Form Modifier) = Damage
 

This equation is a 10% before spell power plus an additional 32% increase in damage after spell power.

This results in a Shadow Priests damage becoming comparable to that of other offensive spell casters.
This equation begins to get out of hand as the priest acquires +shadow damage and +spell power items.  Because this damage is added in before the modifiers, the results are profound. Other casting classes gain buffs to their damage, but nothing on the order of 32%. This allows the shadow priest to grow their damage at a much greater rate than other casting classes.

Other than Mind Flay, the shadow priest’s offensive spells are fairly inefficient. Consequently, a shadow priest will tend to run out of mana before an equivalently equipped mage.  This is a good balance, because a shadow priest can deal a tremendous amount of damage during that short burst.

Unfortunately, Mind Flay only receives 54% of spell power (reportedly due to the snare effect), and therefore does not scale as well as other classes primary damage spell.  While this doesn’t effect priests in current end game instances, as the game progresses, this will probably restrict the damage capability of Shadow priests.

While I hate to brag, this next screenshot is for all those people out there that say all priests should heal: