Its templates suck hard.
Seriously. Open a recent version of Microsoft Office or Apple iWork and just start writing some letter or presentation. Chances are, it will look quite pleasant, if a bit generic. Do the same thing in OpenOffice/LibreOffice and it will look like a document in Word Perfect ca. 1995.
This is not to say that OpenOffice is not capable of producing nice-looking documents. Technologically, it is perfectly fine. But the templates are awful and sadly, that is what most people will notice when you give them a document written in OpenOffice.
Also, the GUI could use a bit work. LibreOffice is a step in the right direction, but it still looks a bit boring and clunky compared to its proprietary brothers. Case in point, my mother 'got' iWork Pages and MS Word after a short introduction. She might not know about all features, but she could find them and use them once we pointed out there existence to her. But over the course of about six months, we were unable to get her to use OpenOffice proficiently.
Example: I have a "Heading 1" style at 20pt, bold, italic. Start a new line at the end of a document, choose "Heading 1", OOo decides to make it 20pt, bold, but not italic. No idea why. Style setting is correct. Only fix is manually adding italic markup to the text.
Basically its software for people who want free software or for people who don't want to pay for software, won't/can't pirate it, and either don't mind tiny inconveniences or have pretty basic needs.
Office is a software package that for many people, represents a big part of their computer literacy. Being a little different can be the same as making them a little dumber.
That said, its perfectly fine. IF MS fell off a bridge tomorrow most people would use it without much issues.
As far as the file formats go, I like it to remind me to convert back to .odt when I'm done using a file in .doc because it uses less of my Dropbox. However, I've given LibreOffice to both of my parents now and they can barely tell the difference- once I set their initial preferences it stopped prompting them about file formats.
Do you like the ribbon toolbar? I was under the impression that pretty much everyone hated it. Honest question.
Sure, setting is a possible "solution" but that implies there is a problem. Most people will do fine with it but most people probably also just wish their son would just install pirated Office for them like their neighbors.
That means it's DOA for a lot of users.