I'm not exactly doing the English MSt., but I'm doing a degree in a department that has a strong connection with the English faculty. I would say that the real question of whether or not coming to Oxford will be useful for you has to do with fit. If you want to do, say, contemporary (20th c.) literature, Oxford is probably not the place. If you want to have access to really fantastic, old, original texts (i.e., if your field is medieval/renaissance lit), you would definitely find being here an amazing experience.
Oxford is, to some extent, what you put into it. There are fantastic libraries and all-star academics (although, again, depends on your field), and there are plenty of lectures/talks in all sorts of fields. You aren't going to get the same sort of seminar-oriented education you'd get from most graduate programs (although you might end up having one or two), but you will probably be given a lot of time to do independent research.
Has Oxford made me a better researcher? By far. The experience of doing, and of doing so as my primary activity (versus "being prepared for class"), has definitely given me research confidence. Am I stronger theoretically? Yes. That's because I'm doing a lot of the theoretical readings on my own in preparation for the papers I'm working on. And there are "theory" lectures every term. BUT, as a warning, I have found a LOT of resistance to my very contemporary-oriented research interests.
I will avoid the "prestige" question because, again, I really do think it depends on what you'd be coming here to do. There's also a strong emphasis on producing written work that is publication-worthy, so if you're not published yet, potentially you could be (or at least have something in the works) by the time you leave here. I definitely don't regret my decision to spend a year here, but I did not apply to stay for the D. Phil both for funding reasons and because Oxford is not strong in my area. Let me know if you have any other questions, and good luck with your decision.