Surveys and focus groups are good tools to evaluate users' interests and feelings about a product (or potential product).  They can be a starting point for determining areas you want to focus more in depth research like observations and contextual inquiry.

Surveys

Strengths

• Getting general feelings about an existing product
• Acquiring demographic data on target market
• Understanding what users "think" is important (marketing data)

Weaknesses

• Survey design is very difficult to get right
• Constrained responses
• Typically limited time & focus for response
• Limited or not ability to follow-up for clarification

• Relies on user to self-report accurately

Survey Design Resources

• 19 Lessons from United Airlines on How To Build A Crappy Survey
• Qualities of a Good Survey Question
• Survival Statistics' chapter on survey design
• Penn State Survey Resource Center's Educational Resources

Focus Groups

Strengths

• Can talk to many people at once
• Allows users to feed on each others' ideas 
• Can help understand users' attitudes, beliefs and desires
• Useful for getting users' reactions to ideas or to prototypes

Weaknesses

• Not great for understanding what people REALLY do with a product
• Not good for understanding what features people will really use in a new product (only what interests them)
• "Group think" drives people toward consensus with the loudest opinion
• Relies on user to self-report accurately

Focus Group Resources

• The Use and Misuse of Focus Groups by Jakob Nielsen