@vansmith
There are a number of real issues, some potential issues and then of course quite a bit of FUD around OGG/Theora. I admit that some of this is cloudy, and I have heard many counter-arguments, although that doesn't entirely invalidate the points.
Quality:
As you know, Theora is based on VP3 which is about 11 years old. Whichever way you look at it, it is not as good as h.264 at low bit rates. What defines a low bit-rate depends on who you ask, but in the 500kbps - 2mb/sec there is no comparison. VP3 is about as good as standard MPEG4 - i.e. good, but not good enough. The kind of quality you get from Netflix instant, ABC player, Hulu and even good old iTunes and YouTube is impossible using Theora at the same bit-rate. Now think about streaming over 3G.
Decoding
Most new hardware built for video can decode and even encode h.264 with ease. nVidia, ATI, Intel, ARM etc all have 'hardware' decoding of h.264, which is why the iPad can play back 10 hours of video on a charge. Now in theory, there is no reason VP3 couldn't get the same love, but h.264 has the momentum and that's unlikely to change without a huge switch. The problem is with the GPL/BSD is that anyone can tinker with the codec, making a fixed hardware decoding solution difficult to implement. Who's to say Hulu, Netflix and ABC won't implement slightly different variations, making GPU decoding impossible for all.
Patents
h.264 could bite everyone on the backside, that's known. With such huge players involved, it's unlikely any of them will try and cash in, but perhaps some small IP company will spring up and try and make a play. Who knows.
As for OGG, well ON2 apparently 'gave' the licence for VP3 away in 2001 making it public domain and the way is clear for mass adoption, so you have to wonder why it didn't gain any momentum. Well the reason may be that for it to be commercialised in any meaningful way does increase the chances of infringing some patent or another elsewhere. Either to add DRM, improve the quality or include it in some closed application. But without support from Google, Apple or MS, it's pretty much dead outside of the OS community.