SUPPOSEDLY most of these problems are software issues, not hardware (Xvid problem, stereo speakers, battery time, etc). The lines on the screen and uneven color distribution have already been fixed with updated firmware on the latest units. The only real hardware issues are the headphone jack & the joystick. The headphone jack I'm sure will be limited to the first batch, and most opinions on the joystick is that it will just take some getting used to (and the "dead zone" can be changed somewhat per each game or emulator).
That said it really isn't ready for prime time just yet. I had planned on buying one this February with tax money--hopefully the bugs will be fixed by then.
In the machine's defense, the scene is taking off pretty good. Good C64 and NES emulators are out there, SNES emulation is progessing rapidly, and there pretty good ports of Doom/Hexen and Quake. Most early adopters (who went through teething problems with the GP32) are happy with the machine. As long as it keeps getting better I think it will turn out to be pretty good.
Don't write the machine off yet.