For me personally the daytime grogginess factor has unfortunately never went away even after 1 year+ of use. As Monroe pointed out however, your mileage may vary greatly.
I can't comment on it's mood stabilizing properties as I don't have a Bipolar diagnosis, there may be elements there but for me it's more like a complicated case of depression.
If sedation becomes too much of an issue in the long term there are certainly other options for bipolar disorder, here is a link to blog by a psychiatrist who ranks the mood stabilizers based on the amount of clinical success he's had with each one;
http://www.askdrjones.com/2005/02/14...d-stabilizers/