I kind of felt this epsiode overall was a bit of a letdown, but I did like the whole "stroll down Other memory lane" - bringing back Mr. Friendly, Goodwin, mentioning the kids, and sort of tying in some of the stuff happening in Othertown while the events of the Losties and Tailies were unfolding in seasons one and two.
I don't know how much they'll figure into the future storyline. I guess they should be at the "temple" with the rest of the Others, if we ever get to catch up with them. I guess we're still waiting for Cane to be officially cancelled so we can get the actor who played Richard back in the fold.