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The problems described in the article are familiar to me, too. Some of them are a result of Smashwords' "use one file to create for everyone" system, and the fact that satisfying the Premium Distribution channels is... involved. Plus, the system might have you think you have more control, but in the Premium channels at least, you don't. Just like authors who go through big publishers, you are still at the mercy of the people with the big pockets.
I wouldn't blame Smashwords for this... most of it is, quite frankly, out of their hands. The mistake many people make is assuming Smashwords has some special relationship with the bookstores that they will take on your behalf, and it's not so. They are, essentially, an open-to-the-public distributor (one that also allows direct sales). They simplify the process, for those who can't handle the complexity of other channels. Their output isn't always the prettiest, but it works.
As long as you have realistic expectations for what services Smashwords provides, you won't be disappointed.
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