It works absolutely awesomely.
My latest (and only) Sun Paladin winner was a Draconian Sun Paladin that used a shortstaff.
Link to his character sheet is here:
http://te4.org/characters/62972/tome/141dd0c7-f7fd-43b4-9b6c-ef7f5b2c2720Your points mostly go into Magic (Damage/skills/staffs/spellpower), then as needed between Strength (talents/armor) & Constitution (health/thick skin)
Damage is not a problem once you get a merchant randart staff (I got lucky with a magewarrior's, magelord's, infernal, protective), but until you find a good shortstaff it is often better to 'cheese' three points into weapon mastery and use a high-tier sword, as good shortstaffs are hard to come by.
By going for light damage and magic, these become much more viable for your Sun Paladin:
Crusade is almost as good as assault when your staff is set to light (2 hits of ~170% light base damage, both can crit)
Brandish has a high cost, but deals moderate damage in a radius 5, lighting the area up, in addition to 1 hit of ~150%
Retribution is an awesome shield that turns into a room clearing force of destruction, easily reaching ~800 damage in a huge radius
Celestial/Light (the entire tree!) is even more powerful!
Shield of Light gives better healing for more survivability.
Don't bother for Celestial/Sun. It is terrible for damage, and no damage modifier can save it. The only partly useful skill is sunburst for the blinding effect.
For chants, I liked the first one for the massive saves, but I suppose the light damage boosting one could have also been just as good.
And finally, don't ever forget these:
Block
Assault
Riposte