Website design usually gets classified into two categories: functional
(read: user-friendly) or innovative ('artistic,' lots of interactive,
etc.). I've noticed that a lot of times sites that are noted as having
great design are a little difficult for the average user to navigate.
Do you think form and function are mutually exclusive, or can a site
be incredibly innovative AND incredibly functional? If you have an example of a site that does both i would appreciate it.

You see, that is the problem with people today, it is either pretty or it works. There shouldn't be an "or". If it doesn't work, you need to fix it. If it's ugly but works, you need to fix it. If it's ugly AND doesn't work, you need to find another line of work.

^ exactly... If its one or the other,then it is neither.

I cant really think off the top of my head if I know of any websites which do both really well.
But here is just one example of a website that sacrifices a lot of usability for extreme coolness:

http://www.thedesignersrepublic.com/
http://www.thepeoplesbureau.com/ [their retail site]

Im very forgiving on them though as they probably are some of the coolest guys on the planet hehe

I hate that designersrepublic site! God that is awful, and the sound effects make it worse.

Originally Posted by Capt Quirk

I hate that designersrepublic site! God that is awful, and the sound effects make it worse.

Bear in mind they're not a web design company; they are more graphic / art oriented. The posters and modern art section on their retail site are good examples! Also if any of you are familiar with the Wipeout series on the PS1 [none after that] then these are also good examples

Do you think form and function are mutually exclusive,

Not at all ! Take a look around www.csszengarden.com - beautiful AND functional

Originally Posted by Capt Quirk

I hate that designersrepublic site! God that is awful, and the sound effects make it worse.

I agree... SO bad

I think function necessarily drives the form that a web site takes. All this can generally be lumped into the "User Experience" buzzword. It is more encompassing than User Interaction as it involves both what the user can do, how they can do it, and what it looks like while they're doing it.

A web site should be functional and look good enough that the user can tell what is going. If you have a beautiful design and your web site doesn't function properly, you've failed. If you have a web site that does everything, but a user can't figure out how to do what they want, you've failed.