Not good... not bad.
The story behind Undercover is that you're an undercover cop who must infiltrate into several street racing groups that are rumored to be involved in other illegal activities, and try to take out their leaders one by one. Sadly the story is handled in a completely unexciting way that fails to entertain in any meaningful way.
The real story behind Undercover however is the desperate move that EA took after watching the NFS series popularity start to wind down. After the resounding success of the Underground games, the series reached its peak with Most Wanted, a game that not only brought back the cops into the fold but also featured a great story told through excellent full motion sequences (that were full of "awful good" acting). The follow up to Most Wanted, Carbon, a game that shifted the focus away from outrunning the cops and more into fighting for territory control, was a successful entry into the series even if it wasn't as well received as its predecessor. Then came Prostreet, where the developers tried to reinvent the franchise as a closed circuit racing experience that featured no cops or illegal races and was much more similar to a simulation racer (though it wasn't realistic enough to satisfy that crowd).
The problem was that Prostreet was poorly received by critics and failed to move as many units as previous games. This forced EA to rethink the direction in which they wanted to take the series. Someone up there must have said, "well, Most Wanted was our last hit, let's go back to that style of gameplay"; a sound idea at first, but sadly it was poorly executed. Instead of revisiting what was great about Most Wanted and introducing new features to move the series forward, they simply revisited Most Wanted... literally.
In a nutshell, Need for Speed Undercover is a poor copy of Most Wanted. It features the same kind of gameplay with the main focus laid on outrunning the cops. It also features a story about undercover police and street gangs told through full motion video sequences. But while Most Wanted's fmv sequences were "awful good", the ones in Undercover are just plain awful. This renders the whole undercover aspect of the game all but meaningless since the story is so uninspired that you never get immersed in the role of an undercover cop.
In fact, uninspired is probably the best word to describe Undercover as a whole. The racing mechanics are by no means bad, they're as solid and enjoyable (as well as unrealistic) as usual, and outrunning the cops is also plenty of fun. But this is stuff that was already done (and better) in Most Wanted. More of the same isn't bad as long as it's just as good or better than what was previously offered. Undercover isn't better or even as good as Most Wanted and considering that there was a three year gap in between games, that's just plain sad.