I know what you mean about all the bad reports, but my personal experience with Time Capsule has been completely positive. My 500GB TC is now 2 1/2 years old (purchased May 2008) and has performed flawlessly. Surprisingly, the serial number of mine is within the Apple-acknowledged problem batch, and it's still working.
I don't know if it matters, but mine has always been placed by itself atop a bookshelf, and not jammed up next to a lot of other electronic gear. Because of that,
perhaps mine has run cooler than many people's. Just a guess.
A few weeks ago I opened up my TC and replaced the original 500GB drive with a WD Caviar Green 2TB drive. It was very easy to do following instructions I found here
http://www.applefritter.com/node/23907 and the result has been working great.
That's my experience. Who knows if the current ones are destined to die or not. I like mine enough that I'd personally buy a new one if I needed one, but I totally understand those who've had one die and would never buy another one.
Regards,
Brian33