We tried out a Pack and Play without much luck. It was given to us at a shower, and we had considered buying an Arm's Reach, but it was too expensive and I heard soem complaints about how it was made (re it broke on quite a few people when buying it)
Anyway, there were a couple of problems with the pack and play. First, I wanted him closer, and I would sleep with my face practically pushed up against the screen with him on the other side. It didn't work well with breastfeeding either, because of a couple of reasons. Once he was done, I would have to sit up, pick him up and set him back in the pack and play. He would either wake up as I was moving him, or about ten minutes after I put him down (the mattress is VERY hard). After two weeks of this and not much sleep we gave up and he's been in bed with us ever since!
I have heard of other though who said it worked fine, so I guess since a friend is offering it to you, you may as well try it out! Good luck!