I think we easily forget just how broken the rest of the OS were. If I evaluate Linux as if I am a few years back in time, I don't mind the lack of good QA.
I've also broken an install because I tried an upgrade and there wasn't enough free space.
But that doesn't mean Ubuntu isn't fit for end users. My mother and my sister are running Ubuntu on their laptops and do just fine. And they are in no way technical: they just use the OS for their needs, be it browsing, music, movie playback, photo management, etc. I was actually surprised when I went at a small barbecue for my sister's birthday and she had brought her laptop and was playing CDs some friends brought with music. There was no friction -- the laptop just did its job, just as it would have been with any other OS.
You do have a point though: upgrades should be transactional and I'm surprised there is no way to rollback a failed upgrade. I'm actually postponing upgrading them to 12.04 because I don't want to risk breaking the current setup they have and give myself extra work for nothing. I've decided to only apply the security updates for now and switch to 12.04 when end-of-life is reached for their current version.
My advice is to use "apt-get dist-upgrade" in the text console (Ctrl+Alt+F1, not a gnome-terminal!) and it should go fine. I've upgraded 4 machines from 10.04 to 12.04. Only one failed to auto-upgrade and needed to fall back to the console to complete installation.
The most problematic part IMO is Evolution. This program almost always causes trouble during upgrades, not only on Ubuntu (I had problems upgrading Slackware GSB at home too). Use Thunderbird or Claws or whatever other mailer if you can...
In this particular case the upgrade was interrupted. I have around 250MB on my / partition now. But as I prefer to upgrade from text console, I caught all "out of space" messages and fixed it trivially (made more room, repeat the command). That's the only problem I ever had with a Debian upgrade. I typically use testing.
Now Ubuntu upgrades are hidden behind a GUI, and you are told not to do it manually. It's not uncommon that they fail to cover all difficult cases. Either way, I have Ubuntu on my mother's machine and I've become scared of making upgrades. A few times I had to drop to IRC to ask for specific instructions because I couldn't figure it on my own.
I'm not great with linux (just use it for home fileservers and the like), and for me it's generally a rule that debian distupgrades go catastrophically wrong (libc going out of sync and half the binaries on the system wouldn't run, that kind of thing). It's not foolproof like an OS X or Windows upgrade.
Ubuntu =/= Debian. I have several servers that have been upgraded from Woody up to Squeeze (that's 5 consecutive dist-upgrades in 9 years) and it's less problematic with each release. The only serious difficulties were switching from xf86 to xorg, then apache to apache2. Switching kernels (2.4 -> 2.6) or libc was quite painless.
Since Etch (Etch to Lenny to Squeeze) except for a couple of minor glitches going with the defaults "just works".
From what I've seen Ubuntu often fails upgrades because of the GUI (at some point during upgrade one or other part of the GUI fails/restart and kills the upgrade process itself). Simple advice: dist-upgrade in a text console (not a gnome-terminal!), and it should work fine.
I've also broken an install because I tried an upgrade and there wasn't enough free space.
But that doesn't mean Ubuntu isn't fit for end users. My mother and my sister are running Ubuntu on their laptops and do just fine. And they are in no way technical: they just use the OS for their needs, be it browsing, music, movie playback, photo management, etc. I was actually surprised when I went at a small barbecue for my sister's birthday and she had brought her laptop and was playing CDs some friends brought with music. There was no friction -- the laptop just did its job, just as it would have been with any other OS.
You do have a point though: upgrades should be transactional and I'm surprised there is no way to rollback a failed upgrade. I'm actually postponing upgrading them to 12.04 because I don't want to risk breaking the current setup they have and give myself extra work for nothing. I've decided to only apply the security updates for now and switch to 12.04 when end-of-life is reached for their current version.