The distributed, eventually-consistent blockchain anchored by mining works and is quite robust against attack. Nobody has yet successfully attacked the basic Bitcoin system and stolen money. So the low level technology appears to be secure.
There are a couple of unlikely scenarios where an attack could work, but newer coins also stop even those possibilities.
Irrevocable, remote, anonymous transactions are the con man's dream. Especially when they're assocated with a whole community of suckers who think anonymous anarchy is a good idea. The scam level in the Bitcoin world is huge. Over half the exchanges have gone under, and that was before Mt. Gox. Bitcoin-oriented "stocks" and "Ponzis" have an even worse record.
Poorly run operations fail. That shouldn't come as a surprise. And con men always prefer cash, which bitcoin basically acts like. When you buy something with bitcoin it's like wiring someone money. Once it's in their hands, there isn't a whole lot you can do about it if you get scammed. That's why for large transactions people will use a certified escrowing service.
Never send money (bitcoin or otherwise) to a party you do not know or trust.
Personal computers are not secure enough to store money. "Bitcoin wallet stealers" are a major problem. Many "online wallet" services turned out to be scams. Storing Bitcoins safely while still being able to use them is quite hard.
Personal computers aren't secure enough to store banking, credit card, taxes, or other financial information either. Yet we do anyway even though we're all one keylogger or screen scrapper away from having our identities and accounts sold to the highest bidder. You protect your offline wallet the same you you protect your other sensitive information: either print it out (see paper wallet) or keep your systems security up to date.
Never use an online wallet, and if you have no other choice but to use one then move money out of them quickly and keep balances small. Any such online services are completely unregulated. In fact, all online cryptocurrency services are unregulated so always treat them with caution. People familiar with cryptocurrencies already know this and act accordingly.
Volatility is far too high for Bitcoin to be a useful currency. Since last October, Bitcoin has gone from $100/BTC to $1100/BTC to $600/BTC. Daily variation often exceeds 10%. The companies that accept Bitcoin for real products have to reprice every few minutes. Bitcoin behaves like a pink sheet stock. Too many speculators, not enough real customers.
No, it behaves like an unregulated currency on an open market.
Something like US dollars are regulated and have a monetary policy through the Fed. When the economy goes screaming or slams on the brakes, the Fed can change policy and act accordingly to keep the dollar from becoming a roller coaster.
With something like bitcoin, there is no central authority. There is no monetary policy. There is no central bank to throw a cold bucket of rationality on the irrational. It is completely at the mercy of the market. There's nothing to slam on the brakes in either direction when things get crazy.
There are scaling problems. Currently, every user has to have a complete copy of the entire transaction journal back to the first Bitcoin, and has to keep up with all the transactions as they happen. The confirmation process has a 7 transaction per second limit. Confirmations take about half an hour before they can be trusted; longer during busy periods.
The newer crypto-currencies have significantly reduced the transaction confirmation times required. However, due to the nature of the system I've yet to see any way to get around requiring the copying of the transaction journal, at least with the way things are. IF online wallets could get regulated like banks, then only the online wallets would need it. However, since that isn't the case every cryptocurrency you have will require an offline wallet and a copy (though some currencies put a "snapshot" on torrents to bootstrap new wallets).
"Mining" is more centralized than expected. The original idea was that "mining" would be a spare-time activity of each user's computer. In practice, "mining" is done in large data centers with custom water-cooled ASIC chips. Two mining pools control more than half of Bitcoin's mining capacity, and they have the power to set fees and change the rules.
Thanks to the huge run up in price, bitcoin mining difficulty climbed to astronomical levels. The only way you can effectively mine for a profit now is if you have big time mining rigs at your disposal. Otherwise, it's a loss. The price spike did in a few months what was supposed to happen over the course of years.
Bitcoin behaved as intended. The market did not. You can't really fault bitcoin here.