The project placed excessive emphasis on nonessential high-effort software initiatives, like developing their own BIOS replacement, desktop interface, UI framework, and nonstandard file manager. Developing and supporting this software consumed a lot of time at the Foundation. Additionally, the project placed a lot of emphasis on unusual, experimental hardware features which they were unable to fully utilize, such as the infamous hand crank (never fully shipped), an unusual hybrid capacitive/resistive touchpad (resistive features were never used), the Pixel Qi display (monochrome mode was poorly utilized by software), mesh networking (software was never fully implemented), hardware buttons for software features that were never implemented (particularly "view source")... the end result was that a lot of time and effort went into designing/redesigning unique features which didn't provide a lot of value to end users.
However, the project placed very little emphasis on the development of boring-but-practical end-user software for the device, like educational games and tools, media viewing tools (like book readers and audio/movie players), or course management software. While they did thankfully ship an office productivity suite, it was literally just OpenOffice; it looked completely different from the rest of the OS, and was poorly integrated. The same was true of the web browser, which was a thin shell around Firefox. Given that these were probably the two most useful apps on the system, the system felt pretty disjointed overall.
Overall, my impression was of a project whose participants treated it as a vehicle for promoting their personal "pet" projects, rather than as a means to a specific educational/humanitarian goal. This severely compromised the effectiveness of the project.