- Linux/Ubuntu is only for PC freaks.
This is simply not true. Ubuntu/Linux is at least easy to use as Windows. For the normal user it is less painful for sure: You are faster up and running (because after installation also many apps are already there), you don't need to search your shitty licence code you probably already thrown away accidently a year ago, you don't get penty annoying questions when first starting your browser, you can install easily whatever language you need for whatever family member or friend who might visit you and you want to share the computer with, you can buy Ubuntu already installed on a USB stick that you can carry around and use it on whatever computer you go, you can easily use any file as a template and many, many more. - Installation of applications is difficult (need to be compiled).
There are distributions that compile everything from source, but even there you don't need to do it on your own. Anyway, most distributions don't require compiling things on your own (however, this is always an option you have, even if mostly not recommended). - Installation of software is usually simpler than on Windows: You start a program (menu entry) which contains a list of available applications, you can search, scroll through the list, just tick the checkbox in front of the application(s) you like to install and click "Apply". Download and installation done automatically then. For uninstall - guess what: Just uncheck and apply again. If you are funny, you can search the internet for a more up-to-date installation package or other application not in the repositories and install it by double-clicking it after download just as you do it on Windows. What is so difficult then? Even a trained monkey can do it. ;-) - Everything must be done on the command line.
Most things nowadays can be done through a graphical user interface also. One reason why much is done on the commandline: It is far easier in a forum or blog post to respond to a question with a few commands that just need to be pasted to a terminal window than it is to explain it with plenty of clicks and menu items (with the ribbons situation is even worse). For the person that receives the help it is also easier. And other than on Windows, everything you can do on the graphical environment you can also do on the commandline. That does not mean you have to do it that way. - Linux looks old-fashioned on the desktop.
Look yourself and decide: http://www.ubuntu.com/desktop/why-use-ubuntu, http://www.kde.org/screenshots/, http://www.xfce.org/about/screenshots, http://lxde.org/image/tid/1, http://www.linuxmint.com/screenshots.php, http://www.gnome3.org/, http://www.enlightenment.org, - All this can be used in Ubuntu - you can choose!
Oh, you want Mac-style toolbar on the bottom - or Windows 7 like - look here for example: http://www.omgubuntu.co.uk/2010/04/you-choose-the-best-dock-for-ubuntu-poll/ - again: You choose, what you find efficient and cool!
What is true, that some older applications are looking ugly because they use old interfaces (sometimes when searching in the repository and try new apps I happen to get such an old-style thingy), but the major part looks very nice. - There are so many variants (of Ubuntu itself and even more if you look at other Linux distributions) so there will be never be a standard.
The core for Linux is the same for all and the most differences are not in the system but just in the desktop environment or GUI presentation. But this is for your freedom and you can anyway start multiple applications using different GUI frameworks. Keep in mind that all people like to work differently. Everybody has his own preferred way of doing things. Hence should be you computer: It should support you by doing the work they way you like! - Ubuntu is not compatible with Windows.
This can't be said so generally. It is applications that are not compatible, file formats or protocols and you have to look at those separately. For example: Many widely used file formats (as JPG, PNG, TIFF, PDF, RTF, MP3, AVI and many more) can be handled without problems on Ubuntu. Even the DOC, XLS, PPT Formats can be handled quite good in the meantime. It is Microsoft that continously invents new formats and changes existing formats (see the latest DOCX which is different in MS Office 2007 and 2010, so that you need to save it in a compatible form from within 2010 if you want it to be displayed in the same manner with 2007 - .docx is not .docx!). Ubuntu better supports more open standards than Windows does (e.g. look at the MIME-Format - this is the format used to send e-mails over the internet - and look what you get from Outlook)! - Ubuntu is developed only by students in their spare time.
Canonical is the company behind Ubuntu, but Ubuntu is based on Debian (look in particular at http://www.debian.org/partners/ for example) and that all is Linux. And many big companies are contributing to Linux! So, if this ever was true, it is not any more since quite a while (see http://www.techrepublic.com/article/linux-standard-gains-big-name-backers/5365462 for example). - Ubuntu is free and hence must be very buggy.
Wherever software is developed, bugs are introduced. There are not more or less bugs in Ubuntu than on Windows - IMHO. Windows is used by more people and companies and hence there is a higher probability that bugs get found but for Ubuntu it is extremely easy to get involved, report bugs and get in touch with the developers and hence get the bugs fixed. So I think we are pretty at the same level here and there although I think, Ubuntu is more stable (of course ;-) ). And why it is free is because of the Open Source idea where people pay for work being done (new features, bugfixes,...) and not for ... (yes for what?). See "The Open Source idea" for details.
Related posts: Document file format, The community, Going Linux, The Open Source idea, Why companies do not use Linux on the desktop, Distribution choice, Outlook Calendar Meetings, The individual desktop, Efficient desktop environment, A few Linux related videos.