Agree with this. +2 is my voteAt LA +3, you trade two levels of psion manifesting for a few hit points, ability scores, PR that scales with level, and Mind Blast. Most of the abilities aren't that good to a pure psion, except for the PR, which is four points higher than the power resistance power can give you (barring the use of Overchannel or other ML boosters, of course), and Mind Blast, which has a long enough duration and big enough area that it's worth using (note that the DC is Charisma-based, which is not ideal for a psion, but you still get +6 Cha, so it's going to be a decently difficult save). Extract is just a fancy way to coup de grace someone, which is cool, but not hugely powerful.
A 12th-level psion with 25 Intelligence (18 base, +3 increases, +4 headband of intellect) will have 126 + 42 = 168 power points.
A psion 6/constructor 6 with the same Intelligence will have 106 + 38 = 144 power points.
A mind flayer psion 1 with 30 Intelligence (18 base, +8 racial, +4 headband of intellect) will have 88 + 50 = 138 power points.
So the illithid's manifesting is quite a bit worse than a straight psion's, having no sixth-level powers, 18% fewer power points and lower manifester level (total number of your highest-level power you can manifest is about the same, but your highest-level power is weaker). It is closer to a psion who's lost a manifester level to a nice PrC, though less able to get future PrC features (capstones, especially, insofar they're relevant).
I don't think I'd play an illithid for the power at LA +3. I'd rather just have a psion/PrC, with more power points, higher ML, and deeper into a relevant PrC. If I really wanted to play an illithid specifically, I'd probably be willing to take the hit at +3, though, treating it as an okay PrC. I can see why many people voted +3.
At LA +2, the illithid would be like a powerful PrC; you lose a manifester level, but you get some perks (small gain in bab, nice hp gain), good PR, and Mind blast. I'm fine with that, really. I'll go LA +2 for these.