What effect did Constantine's conversion have on the lives of Christians and Christianity itself?

Initially, Constantine's embrace of Christianity greatly improved the morale of Christians. They had recently been subjected to a sustained campaign of persecution at the hands of the Roman Emperor Diocletian. Now, at long last, they had a powerful ally who could incorporate the Church into existing social and political structures, making it much more stable. In turn, this led to a substantial increase in the number of Christian believers, who now felt safe to proclaim their faith openly without the fear of persecution.
Constantine's promulgation of the Edict of Milan in 313 CE formalized the official acceptance of Christianity and its new exalted status within the Roman Empire. Christianity was now effectively an arm of the Roman state. Inevitably, this led to the Church becoming a political institution, taking on a much more worldly complexion. Theological controversies were no longer obscure intellectual matters; they now had serious political repercussions. The stability of the Empire needed to be maintained and theological disputation could not be allowed to undermine its integrity. Diversity of opinion was no longer a luxury that the newly-established state Christian Church could afford.
The First Council of Nicaea in 325 CE, presided over by Constantine himself, attempted to enforce theological orthodoxy. As the Church began to look for heretics within its own ranks, it became increasingly intolerant of other faiths. The Christian Church was now more confident, more stable, and more secure in its outward structure. Yet, at the same time, it still retained a sense of insecurity about its place in the world, which manifested itself in an accusatory mindset toward anyone not considered an orthodox Christian. Earthly power had turned the hunted into the hunters.