Recs.
Updated
Specs
Pros
Pro Shows full characters for wide fallback fonts
Many terminal emulators that deal with wider fallback fonts (i.e. double-wide characters in CJK fonts) truncate display of wide characters, show Unicode "missing glyph" characters, or simply fail to display the characters at all. XTerm is "smart" enough to simply take up the extra space needed to show such wide characters.
Pro Many modern terminals emulate xterm
Many terminal applications, such as OS X's Terminal.app and iTerm2 (among others), all claim xterm or xterm- variants as their $TERM and aim for support of xterm's escape sequences. Many command-line applications will assume or even hard-code escape-sequences and behavior for xterm and those terminals emulating it.
Cons
Con Historical source code
The stories behind terminal emulation beyond their classical representatives (of which xterm is simply the most long-lived) are somewhere inbetween subtly irritating to downright surreal.
Recommendations
Comments
Flagged Pros + Cons
Pro Configurable via Xresources
X Toolkit resources and xrdb predates what is currently called "theme". Although one needs to read man, mitigates most listed cons