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The F-35 is one of those projects that people love to hate, and it's very easy to do so. It's incredibly expensive (the entire program, out to about 2050, will end up costing nearly $1 trillion), the aircraft itself has had teething issues, and questions have been raised about more or less every aspect of the F-35's performance. However, I think that the F-35 is a highly suitable successor to the F-16, the F/A-18C/D, and the AV-8B, for a number of different reasons.
Let's start with cost. The F-35 is planned to cost $85 million when full rate production starts, and costs million right now, in LRIP 8. Furthermore, the Israelis bought 19 at each (including the entire rest of the support system). These are big numbers, but consider this - the UAE just bought 35 F-16 E/Fs, the latest and most comparable model, for between each, also including support costs. The F-35 costs less than the latest F-16, then. The project estimates operating costs between 10% and 20% higher than those of the F-16, with current (test) O&S costs about higher.
To discuss performance, we need to consider all the various things the F-35 does and consider them separately, comparing its performance to the airplane that it's replacing in that role.
Fighter/Air superiority
Neither the F-35 nor the aircraft that it is replacing are air superiority fighters, per se. Instead, they are designed to make things on the ground explode first, then fight other aircraft second. However, the F-16 and F/A-18C/D have set quite a high bar for the F-35's performance in this role, and it at least needs to do as well as its predecessors. In general, the F-35 doesn't end up that badly in comparison with the F-16, at least kinematically. While performance data is mostly classified, pilots have said that the when both are carrying combat loadouts, a advantage made even more profound when the drag of the F-16 is increased by adding the conformal fuel tanks on the F-16 E/F. Additionally, the F-35's acceleration at the same effective range is similar to that of an F-16, again putting it in approximately the same ballpark of kinematic performance.
Additionally, in comparison to the F-16 and F/A-18C/D, the F-35 has a critical advantage: IRST. The F-35 integrates a all aspect IR system called EO-DAS, combining IRST, MAWS, and navigation cameras into one unified system. This allows the pilot to see through the aircraft, removing the rear-facing blind spot as well as enabling the pilot to look through the floor of the aircraft. When combined with the other major benefits of IRST, most notably long range visual identification, this provides the F-35 with a major advantage against the legacy aircraft that it replaces.
In terms of radars, the F-35 wins yet again. The F-16 is the only predecessor that can even come close to competing, since in it's E/F incarnation it carries the AN/APG-80 or a derivative of such. However, the F-35's AN/APG-81 has more elements, providing it with better beamforming ability.
Loadout-wise, the F-35 performs somewhat worse when limited to internal configurations alone. Until a tentative block 4 upgrade (to 6 internal), it can only carry 4 AMRAAMs internally, compared to the F-16E's 4xAMRAAM + 2xAIM-9X or the F/A-18E/F's 6xAMRAAM + 2xAIM-9X. This can be rectified by adding external weapons, up to the same 6xAMRAAM+2xAIM-9X as the F/A-18E/F, but the performance takes a hit and LO advantages vanish entirely.
In comparison to the latest Russian and Chinese fighters, the F-35 comes out ahead again. While these latest aircraft incorporate LO features, its RCS is still much larger than that of the F-35, exchanging RCS for lowered cost. Furthermore, American IRST technology is substantially better than that used by the Russians, and the F-35 likely also enjoys a radar advantage over the AESA used in the PAK-FA, still in the infancy of its development. The F-35 is kinematically less capable, as it mirrors the performance of the aircraft that it replaces with reasonable accuracy, but has both BVR and WVR sensor advantages that, when combined with new missiles, provide a good chance against the latest Russian aircraft in the WVR environment
Strike
The F-16 and F/A-18 were superlative strike fighters, and the F-35 continues that tradition. The platform provides better penetration, range, and ESM, all while maintaining similar payloads and self-defence capability. The F-35 can reach a combat radius of 613nm when carrying the maximum internal 2x2000lb+2xAMRAAM internal loadout, while maintaining penetration. Combined with its substantially higher usable payload (18,000lbs vs 17,000lbs (F-16) or 13,700lbs (F/A-18C/D)), the F-35 can hit its targets harder, further away.
The F-35 additionally adds the EOTS sniper pod system, essentially the well regarded Sniper XR pod, except mounted internally. This prevents the F-35 from having to carry a heavy and draggy external target designator pod as the F-16 and F/A-18 do, and enables every strike package member to self-designate LGB strikes.
Furthermore, the VLO capabilities of the aircraft become hugely useful in this regime. The F-35 can approach closer to radar sites without detection, enabling it to maximize range by reducing deviations around EW systems as well as penetrate deeper before employing weapons. This capability is largely retained against even metric-band systems, though detection range with these systems is increased due to larger RCS.
CAS
The main advantage of the F-35 in the CAS role is the integrated sniper pod. Every F-35 will have an optical system on it, not always true of the prior platforms (especially Harrier). This enables any F-35 to be able to provide CAS, no matter the low-altitude environment, while the VLO features enhance survival against medium range threats. Modern sniper pods provide substantial resolution, even from very high altitudes - this is best seen in this video, taken from a RAF Tornado at 17,000ft:
This high resolution capability enables identification and accurate targeting, even when friendly infantry is close to the target, and also enables the FAC to acquire better battlefield intelligence when combined with the ROVER datalink system.
Based on these features, the F-35 can provide comparable or better performance in the roles that it was designed for, all at somewhat reduced cost. Because of this, I think that the F-35 is a sensible investment as the US's next fighter platform.