I've actually had a first-generation hybrid drive (Momentus XT 500GB) where the SSD failed. It's not a critical failure, but it does cause a lot of oddities. I had issues with reads sometimes taking longer off the local disk than it did off a network share... in Durban. And yes, we have servers in Durban :) Anyway, yes the failure makes the operating system almost unusable (Windows) but I was easily able to recover to a new 2nd gen 750GB Momentus XT which has been rock solid reliable ever since.
Note that the SSD is a read cache only, though I believe some of the more recent ones actually have write caching as well... I'd be a bit dubious of them myself.
I'm not completely sold on Seagate's position here though. I think that they're right that an SSD cache in front of a spinning disk is a great compromise. Yes, my laptop is actually quite acceptable speed though nowhere close to my Intel NUC with a 128GB mSATA SSD in boot speed... but actually running I only occasionally have times where I'm sitting waiting for my system to catch up with me. As a general rule I'm highly productive... and for those games I play on my laptop with Steam the launch and disk access performance is good enough.
I do definitely notice a bit of a "performance ramp" in that when I first got the drive installed and got my applications installed there was a definite timeframe when things were a little slower and I noticed speed up... but these days since I have pretty set work routines I don't have any noticeable difference in performance from day to day. As a general rule, it's the very occasional app launch that seems to take forever that really stands out. Again, though I have to say that in general my laptop launches frequently used apps noticeably faster than my colleague's laptops. I'm currently the only person in the company testing hybrid disks.
Yes, a straight SSD is a lot faster, but you're right in that the failure modes of an SSD are pretty binary... one moment they work and the next moment it's "Operating system not found" on boot. Believe me... I've been down that road and as much as I love the speed of SSD I won't commit my critical data to it. Of course, I also live by the philosophy that data doesn't exist until there are at least two copies (one on my drive, the other on my backup). And all my actual data is stored on a GIT-based Dropbox-alike so I have a local cache and a copy backed up and versioned to my server!