Of course they are perfectly silent and super fast but you can't get anywhere without seeing someone commenting on their high-failure rate, defragmentation issues, firmware data loss etc.etc.
Is this really the case, is it still untested technology?
Because I would rather prefer reliability over silence and performance any day.
OK, in order of your questions.
A HD Normally fails do to mechanical issues. ei, the head breaks from an arm, 1 of the 2 motors dies, etc. You almost never have a failure in the media. (yes you always have issues in the media, but the HD itself corrects this, but not a true failure) You can also loose the electronics in the controller, but this is not that common.
A SSD is the other way around. The media (flash) in the SSD will fail almost always before anything else! BUT before you say anything, the SSD manufacturer know this too, and just like the media on the HD, have put in place ways to keep this from causing issues. First, most SSD's are "over provisioned" These means there are extra blocks of flash the YOU can't see, just waiting for a write failure to happen. When the controller sees a write error, it maps the extra block in where the old one was, and marks the block as unusable. Second they do what is called wear leveling. This means that you use each block the same amount. You will write ever block once, then every block twice, etc. (not followed absolutely but close enough)
There are some OS things that helps this. One of those is the trim command. Until SSD became popular, when the OS was done with a file, it just marked the data as not used, and the OS just overwrote the area. It never "erased" the data, unless you used one of those secure erase programs/addons. The problem with this, is the drive did not know the area was unused, just the OS did. Because of that, the SSD controller can't do wear leveling, as it didn't know that area of the flash was unused. The trim command tells the drive that an area is no longer in use, and so the controller on the SSD can now erase that block, making it ready to write. (oh, skipped a note, a SSD has to erase a block to write to it) This does 2 things, speeds up the write to that block, and lets the controller do wear leveling. Trim did not effect reads at all, but they aren't effected by this, just writes.
First see TRIM above. Without trim, you don't truly get fragmentation, but a longer write cycle cause by non-blank flash blocks. Without trim, you have to read all the data in a block, then add your data, erase the block, then write the data. With trim, you just write the data to a pre-erased block. Second, fragmentation on an SSD (within reason) doesn't cause much slowdown to the drive. To "move" from one block to a random block location on a SSD has no extra overhead. The only fragmentation you will see, is inside blocks. So if a small file is in 2 blocks of the flash, you'll need 2 block reads, were if the file is in a single block, there is only 1 read. On a large file, that covers lets say 20 blocks, there are 20 reads, and the locations don't matter, as the controller can access any block in the same time.
Firmware data loss ....
Some of the early sandforce firmware was buggy, but it's just like motherboards. The first thing you should do, is flash to the current release BIOS before use. From what I understand, most of the firmware data lost, was really SATA driver bugs, as an updates to latest drivers (April 2012?) seems to have fixed all the issues. I've been using SSD for systems drives since for about 3 years, and have never seen and issues. Saying that, I just started using a sandforce based SSD.
ect., ect. ....
Again, I've had zero issues with SSD system drives. I have went out of my way to minimize writes to them, but I started with first gen SSD, and they needed help. Most "experts" say that a normal person, running windows will not have SSD issues in the normal life of the PC with the current gen SSD.
So, back up your system about once a month, backup you data as often as you can (I do mine Monthly/daily) no matter what you use, and you'll be fine with either system.
Hope I didn't put anyone to sleep.