Even leaving out the severe difficulties with particular devices, the niggling problems which have been present in the upgrades have been really annoying. My device came with .14, but didn't include the wifi drivers, so I had to upgrade to .16, which had a real problem with missed page taps. Upgrading to .17 improved that, but removed the top margin from my books. 2.0 fixed that, but made page turning slow. 2.1 has fixed that, but there is still the annoying cover-switching bug. I can live with that, but this is the first firmware where I have not got fed up at some point and factory-resetted to .14 and lived without wifi in return for a decent reading experience.
And what is odd, is that all these problems have been immediately apparent to users, and don't seem to be device specific - which makes me wonder what kind of testing has gone on at kobo hq - how they were able to not notice that tab detection on .16 made menus unusable, for example, or whether they actually tested .17 with any sideloaded epubs. I don't want to invoke the thunder and fury of some users, and I still think my kobo is awesome, but these things have had a real effect on my enjoyment of the device.
In my opinion, the main issue has been with testing, as these bugs haven't been picked up. I think kobo should release 'testing' versions of the firmware in advance of the full release - on the understanding that it is installed at the users own risk - and only in a zip file so there is a small technological barrier to installing it. That way they could get feeback from more users and hopefully iron out some more bugs before the full release.
I love that kobo offers a real alternative to amazon, and supports the use of open epub formats and so on. This is partly why I don't want them to get a reputation for buggy firmware releases, because that kind of reputation can be hard to shake. For most people (at least in the uk), the kindle is the default ereader, which means that it wouldn't take much in the way of slip-ups from kobo to make it an easy choice for people to just go with the default.