That's a huge problem. Some times we end up shitty solutions to problems because the people who wrote the software do not care to fix its bugs and there's a lack of investment in creating better solutions because the free, open source solutions exist. Just look at the state of version control software.
Other times we end up with a good, expensive commercial product and a free, crappy open source product with a huge gulf in quality and price between. Examples: Photoshop and GIMP, MS Office and OpenOffice.
You're always going to end up with shitty solutions to some problems. Making open-source projects good requires several people to devote their lives to it. Very few projects achieve critical mass and all the other ones languish in obscurity. There's always going to be way more failed projects than successful ones. If you consider their existence a huge problem in open-source then it seems the only fix would be to stop trying. I don't think crappy solutions dissuade people from making better ones, if anything all they do is cause people to think: "These guys obviously got nowhere with this project and I don't see what I'm going to do better." But given the amount of duplication in open-source I don't think people really even think that either. It's just that they attempt to make a better version and fail leaving the world with another shitty project. Or, in rare cases they actually succeed and we do wind up with something great. But we wouldn't ever get there if we didn't make 10 of those "shitty solutions" along the way.
True, gigantic GUI programs such as full Office suites featuring heavy featuritis aren't the best match for volunteer-based development efforts. They just involve too much mind-numbing busywork.
What's your point regarding versin control software?
Other times we end up with a good, expensive commercial product and a free, crappy open source product with a huge gulf in quality and price between. Examples: Photoshop and GIMP, MS Office and OpenOffice.