I'm personally not a fan of the FATE system, although it is the system that got me into RPGs (huzzah Dresden Files!). While it'll always have some loyalty from me (until I finally knuckle-down and figure out a Dresden Files magic system for Storyteller or a homebrew system my friends and I use), it doesn't match what I want out of a game.
First, I don't like the simplicity of the mechanics. To some extent I have the same issue with D&D; I personally prefer an Attribute+Skill system, as it seems more... Accurate, I guess? Your Endurance should be a mixture of your natural stamina and your training, your strength should have an impact on how much damage you do, etc. Not in the 'I invoke one of my Aspects for this benefit right now' sense, but the overall sense.
Second, I don't like how the stats and dice make some wonky probabilities. The books suggest that the difference between a +4 and a +5 would be minimal; it doesn't work out that way when the dice start rolling. Having a 1-3 die difference in another system isn't near as much of a be-all-end-all like a single level of difference in a skill can be in FATE.
Third, the system is too... Nice, I suppose. When certain things happen, certain events should occur, which FATE explicitly disagrees with. A lot of people around here have seen the arguments regarding things like high-value Weapons; should someone hit with a missile die? According to the system, not if the shooter doesn't want them to. Take-Outs, buying out of things with Fate Points, etc. aren't my kind of game.
Fourth, I'm not the biggest an of the abstractions used in the game as they stand. Resources, feats of strength, Zones, weapon damage, etc. It's all a bit too vague for me.
Finally, there's a number of little quirks in there that aggravate me. 'How is Resources a skill?' is the big one that just tweaks a nerve whenever I look at making a character.
Long-story-short, I enjoy a bit more crunch to my games. Give me d10s or d6s, let me do a little math, etc.
That said, I do enjoy some aspects of FATE. Aspects are a big yes, even if I'm not the biggest fan of Fate Points. They're great for character flavor. The Power/Stunt system is a good implementation as well.
As far as what you're saying, firegazer... This is just my opinion, but I wouldn't call those systemic problems. Those come across as people problems; some folks naturally hog attention, some folks see flaws as bad things, and some folks don't think figuring out how things will go down out-of-character is the right way to go.
I've played White Wolf for years (Exalted in particular), mostly on chats. Some people are indeed better at being jerks, and use that to take advantage of the people who aren't. Others are more verbose, or can simply get what they're trying to do out better or faster than others. In most games, somebody is going to get more attention than the others, because that person is able to acquire it somehow. I've seen it happen in FATE as much as in other systems.
Roleplay itself should be an (the?) incentive to roleplay, in my opinion. Why play a roleplaying game, otherwise? As far as Merits/Flaws go, it shouldn't just be doing it for the points and then never bringing it up again. You got the points, it should be coming up, especially if you're using the positives you purchased. In regards to getting your character taken advantage of due to how they're played; that's a part of the fun! The barbarian getting suckered into a fight they shouldn't have picked, the thief taking the valuable shiny that probably should have been left where it'd been found, etc. Out-of-character, you might go 'I know this is going to be bad', but rolling with it often makes for a better story.
Those release valves are just as possible in pretty much any system, although FATE does reward it with cookies. I'm honestly not the biggest fan of it anymore; I've been in a number of games where an utterly incompetent and idiotic person joined up, and continued going on because people were meta-gaming away any conflict between players. It wasn't something I could do anything about besides not play with the problem-players, which made it worse.