The answer isn't a simple one. For one thing, Holy is still an incredibly powerful tree and Holy Paladins are still the best single target healers in the game, with Holy Lights critting for ludicrous amounts in the Wrath Beta. It is also now more capable offensively, with ranged Judgements, better coefficients, and a lowered cooldown on Holy Shock. Even then, there are many indications that Holy has fallen behind on many respects, and many Paladins are considering speccing Retribution or Protection because of it. That's not a good thing at all.
One of the biggest issues for me is that Holy has fallen behind on mana regeneration. With the changes to Judgements of the Wise, Retribution can actively regain mana stupendously. With the new Blessing of Sanctuary, a Protadin can reactively regain mana like a monster. This leaves Holy with the gimped Illumination, which works off crits which is only controllable through Divine Favor. A Holy Paladin's mana regeneration is based on RNG, which necessitates a high crit rating in order to proc.
The mana returned is also based on the cost of the spell as opposed to a percentage of total mana unlike Judgements of the Wise and Blessing of Sanctuary. Illumination needs to be seriously reworked in order to be competitive with the other trees' mana regeneration. Furthermore, in order for a Holy Paladin to regain mana, she needs to spend mana, which is counterintuitive to most mana regeneration mechanics and the end result isn't true mana gain but rather a mere mana rebate.
I know there's Divine Plea, reworked to cast in a pinch, but it's at Level 71, making it inaccessible Patch 3.0. Furthermore, it's like healing with Mortal Strike on the target. What's the point? In the context of Wrath, Illumination is no longer a viable mana management mechanic. It's a 5-point talent. With the way things are shaping up for the class, it's no longer worth it but Holy Paladins have nothing else.
Seals and Judgements
While I was thrilled at the fact that Holy Paladins could now use Judgements in instances and raids, it looks much better on paper than it does in practice. For one thing, Judgements in Wrath eat up the GCD, setting back critical healing time. Judgements of the Pure simply doesn't grant enough haste to make Judgements worth it in between casts, particularly when a target needs to be spammed with heals -- something that a Holy Paladin does a lot. Having to switch targets in order to judge also slows down reaction time unless you use mouseover healing or a targetoftarget macro. It's cumbersome to use because it requires swapping looks at an enemy and at healing targets.
Seals are still useless on Holy Paladins because Judging yields very poor results, specially with the spell damage coefficient nerf. Because Holy Paladins don't attack with a melee weapon, Seals are largely useless as a mechanic. This is a problem because Seals are a core class feature. Holy Paladins should be able to take advantage of a Seal even without attacking with a melee weapon.
The thing is, Seals and Judgements need to be a part of a Paladin's spell cycle. I know, up until Wrath, this wasn't even on the table for Holy Paladins.But it never made any sense to me how healing locked me out of the Seal system. First, Judgements of the Pure needs to be buffed or reworked to make it worth casting in between heals. Right now, Judgements break casting with the GCD and it creates problems. Personally, I think the idea behind the talent is great. But 10% haste simply isn't going to be worth it. Fixing this talent could be as simple as giving a massive haste bonus but for a shorter duration -- maybe 100% haste for a few seconds.
Seals need to be viable by granting a talent that gives the Holy Paladin a bonus for having a Seal up. Right now there's no real reason to have a Seal up. Again -- and I need to stress this -- Seals are a core class feature. If Paladins don't use Seals, they're locking out one whole aspect of the class. The only way for this to work is for the Holy Paladin to gain a passive benefit from Seals.
Flash of Light
Another problem with Holy is that Flash of Light has fallen behind as a healing option. It heals for too little against raid bosses and simply isn't going to keep targets alive in PvP when they have a Mortal Strike effect on them. Many talents in the Holy tree favor Holy Light such as Sanctified Light and Light's Grace. This makes Flash of Light an option purely because of its low cost. But because it gains no benefit to casting speed, it becomes unwieldy when spammed in succession.
Paladin healing, more than anything, is about spamming. Despite the possible inclusion of Holy Shock into the spell cycle -- which will still deplete mana faster than necessary -- Paladins will be spamming Holy Light and Flash of Light like crazy against raid bosses and even in Arenas. Flash of Light needs to benefit from spamming and get better crit coefficient. The Holy talents leave Flash of Light out in the cold. For a class that has only two real healing spells, that's not very pleasant.
The problem with Holy right now is that there are a bunch of talents that just aren't attractive or fun. Take Blessed Hands, for example. We all know it's useful, but right now it's just sitting there in the tree not being synergistic with anything else. Then there's Pure of Heart, which is nice and all, but it's just boring. I appreciate that they buffed it to 50% from 15%, but just like Blessed Hands, it doesn't exactly work with anything else in the tree. Stray talents like these make the Holy tree feel incohesive and directionless.
There's Sacred Cleansing... which simply doesn't feel right. Anyone who's ever healed in an Arena will know that spamming Cleanse is a huge risk because it eats into the GCD and it's always a hard choice between Cleansing and healing. Furthermore, the stacks of debuffs and talented resistances to Dispel mechanics often makes Cleanse less effective than it should be. This deep Holy talent does nothing to address those issues.
Sacred Cleansing also doesn't work like most spells because it increases resistance. Blizzard has been moving away from resistance and towards effect duration reduction, so it's a strange spell right now. This is also one of those talents that don't feel cohesive because it affects just one spell and doesn't lend anything to the other Holy talents or spells.
I love Holy. I think it's an amazing tree, and I truly enjoy the spec. The trouble is, the other two trees are more fun right now, and I've particularly been lost in the joys of Retribution. So much so that when I finally played around with Holy, I came to the sad realization of how far it had fallen behind. The encouraging thing is that Paladins have yet to see a proper second pass. With the amount of work done to the class, it's only fair to assume that balancing and tweaking it isn't a simple task.
Furthermore, Blizzard called out for feedback on the Holy tree, and players responded well. The developers have also responded very well to many concerns of the other classes, and there's no reason to think they won't be addressing critical issues with Holy. In fact, they hotfixed Judgements of the Wise in Retribution just to solve Retribution's poor mana management before a patch. There's still time to tweak the Holy tree, and from everything that I've seen throughout the Wrath development process, I am fairly confident that most, if not all, of these issues will be addressed before we see the expansion released. I know I sound hopeful, but hey, I play a Paladin. Hope is what I'm all about.