Extenders. Amazing UI. Xbox 360/Zune integration. Tuners, tuners, and more tuners. Media Center Studio.
Let's not forget that it's easy to setup any other programs that run on Windows (Let's be honest here, most GAMES) and integrate into Media Center too with Media Center studio.
Why play on Xbox 360, when I can play on my Media Center (with an Xbox 360 controller) and get better graphics and better performance?
And if I really, really want to view Hulu, or use XBMC, or use Boxee, or use the-next-best-thing, you can just have a plugin.
To be honest, the only problem I've ever had with Media Center is Media Player's tendency to replace folder.jpg artwork in the album folder. It's not like I have to code to fix it though, I simply checked a box for it not to cache the artwork. (Which I found by doing a google search).
It's difficult arguing for a Microsoft application on Slashdot (Perhaps, a prince of FOSS), but in my experience it really beats out the competition.
Let me ask you the same question: What are the downsides you see? Is cost the only downside? What do other applications do that Media Center can't replicate?
To be honest, your story of your friend doing a driver update sounds more like a Ubuntu/Linux story. A quick google search for "Pulseaudio problems with XBMC" will prove my point.