Keep in mind that the story takes place almost 30 years after Nemesis, so things are going to change (especially uniforms, which seemed to change every few years...though I don't think Starfleet would include lime green as a base).
I think that actual storyline, though, is pretty close to canon, at least as a decent extension of it to get to where they wanted the game to be. It has a lot of the "characters that we know are important" to it, but that's almost to be expected. I'd say the writing in general is on the level of a low-tier DS9 ep, or a mid-tier Voy or Ent. Some of it is drek, some of it is decent, but it's mostly just satisfactory for a MMO.
If you want to RP "real" Trek, you can. If you want to fly around in your crazy frankenship, or an old-style Connie in 2409, you can do that too.
The main issue is not canon- or story-related, but the fact that it's a pretty bad MMO. Leveling is way too fast, and then the end-game content is pretty non-existent, and very grindy. The story parts are fun - and there are player-created scenarios that are really good, and very Trekish - but they are entirely unnecessary to even touch (I got an alt to max level only playing the first two missions), and don't give the best rewards.
Honestly, if it wasn't Trek, I'd advise against getting too invested in the game, at least at the moment. Playing it, that's a different story. I found it almost perfectly hit an empty spot in my gaming life. If they can fix some major issues (mainly the grind), I could whole-heartedly endorse the game. But I can't. I can only put half a heart into it.