This article has a crucial flaw. It merges the concepts of innovation and polish.
Much of the FOSS software is lacking in polish. The interface may not be pretty or there is a single feature that is a bit hard to set or whatever; however, that has nothing to do with innovation. Innovation is the moving forward into new features and capabilities. In that realm, FOSS is frequently the leader. Why? Because in many cases the proprietary systems look at what the majority of users will want and ignore the minority groups. When you do this, you end up with the worst of all worlds from a feature standpoint. It is a challenge to support the beginning user and the advanced user at the same time. It's a challenge to allow the business user to utilize the same product as the technical users or even home users. The place were FOSS most shines is in the fact that the products are open so that a developer can step in and say, "This product would be better for group X if we added this functionality so I'll add it." In some cases that developer is in group X.
I am an owner of an Ipod Touch. I absolutely love the thing. I can do about 80% of what I want on it. Why only 80%? Not because the capabilities I want are complicated or costly to employ. Because the manufacturer feels that my use of the device is a minority use so they never developed the features. For example: I heavily use my Ipod Touch as what it is (an Ipod ... read the term pod as in podcasting). I listen to multiple podcasts daily. I can now download podcasts directly over wifi; however, the feature is crippled by the fact that the Ipod Touch will not keep a list of your podcasts. The only way to keep a list of the podcasts you listen too on the device is to keep around an episode of the podcast. That combined with the fact that the device allows no feature for "download all new episodes of my podcasts" (which it couldn't do without the list or you would have to keep around old episodes for it to know what podcasts you listen too) make the device a pain to work with. As an alternative, it would be great to sync over wifi with my computer, but that's not possible either. So, a device that is meant to listen to podcasts on the go and has wifi support and the ability to download over the air makes it painful to do so without a frequently cabling. This is the exact place where a FOSS approach would shine. A developer would be able to add one or more of these features without having to get the original developers to "come around".
So, I can see that FOSS sometimes fails on the polish side and may not always produce the best interface, but the idea that it lacks in innovation simply put does not make any sense.