I would usually describe someone's work as "nice" if reading it put a smile on my face. It usually means that it was an enjoyable, easy read but probably not outstanding. I see it as a rather weak sentiment with respect to writing.
I would describe a person's actions as "nice" if they did something out of the goodness of their heart that they were not necessarily obliged to so; something to help a fellow human being. In this context, I guess the word is a bit stronger.
When referring to a person, "nice" would be used when I have not spent enough time with them to form much of an opinion but have not, as yet, come across any glaringly obvious negative qualities. It's a filler, non-committal word.
Generally when I say nice my thumb goes up in approval, as does my smile. When I say something is nice I mean it inspires a bit of awe, not quite as much as awesome, but pretty close. If I say someone is nice, it means I like them quite a bit. Though I do use it sarcastically, I tend to reserve it for situations that were my own fault, like falling off a ladder or tripping over my feet, I'll mostly get up saying "nice one Andrew" with a fake smile on my mug.
Totally depends on the context and tone.
If the comment was:
Nice! <-- positive. It's an urban expression, and it means they thought it was cool, fun, entertaining - all that. With this tone, 'nice' actually means 'great'.
Nice story. <--- boring. It's about as milktoast of a comment as you can get... meaning that it was good but nothing special or warranting much reaction.
Nice. Maybe it is colloquial but where I come from it is often said, drawn out and the 's' pronounced as a 'z' and definitely means much better than average. It can be interchanged with awesome. I would definitely say that it can mean different levels of good from mediocre good to excellent, depending upon the user and how they state it.
'That sure is a niiiizzze ass on that chick!'
Here in Australia 'nice' is undergoing something of a resurgence. If said with the 'a' drawn out it is very positive. I often pass a beautiful lady with a "Naaaaa-ees." But as the Brits often use it re: "Oh, nice!" It is very negative.
If it came from a Yank, and if it was the first word in a comment, that's a very good thing. When someone sees a "hot" car, motorcycle or girl go by, a long drawn out "Niiiiccce!" (pronounced like ice only longer) is a statement that it was exceptionally pleasing (as is "Hot!). It would need no other support and the rest of the comment might be explanation for why it deserved such a compliment. If it was used within a longer sentence, "That was very nice" could have a much more complimentary meaning than "That was a nice story", which is what you might say when you don't want to hurt feelings.
I agree with the above comments in that hearing it verbally makes it easier to understand the exact meaning. It is harder to convey in text, but a Niiiice followed by !!!! is most likely a good thing. A very or verrrry in front of it is better, and if it is all in caps, even better. Referring to someone as nice is probably ok, maybe just because you may not know them real well or they are not evil, but not outstanding either. If you say someone is really nice, that is much more positive, where as kinda nice would be a much more hesitant comment. So basically, you have to look at more than just the written word. consider any additional adjectives, punctuation and how long the word is drawn out.
