I wouldn't claim it's the most reliable car ever, but it's been pretty good, although it certainly helps that I like to turn a wrench. Part of the reason for the unreliability (IMHO) is that many owners tend to modify them to within an inch of their lives. That's all well and good, especially if you track your car, but it tends to cut down on the reliability of a DD.
There was an issue with some of the early VIN motors eating through the cam follower which requires the replacement of the follower, hpfp and intake cam shaft (cost seems to be anywhere from $1500-$2000 at dealerships), but VW recently extended warranty coverage for it up to 120K miles, and only the engines in the first couple of model years are affected. Later cars came with a revised engine that has a roller cam in place of the tappet style follower. I discovered my follower, cam and hpfp were cooked after I was outside of the original warranty, at about 80K miles, and had to fight VW to cover half of the cost (I keep meticulous records, so they couldn't blame me for neglecting oil changes). They reimbursed me the other half when they extended the warranty, which was nice. I now check my follower every 10K, and they're about $50 to replace. Even with the dreaded banjo bolt on the fuel line (newer cars have a soft line with no banjo bolt) I can do it in well under half an hour. Also, because the engine is direct injection it tends to have a buildup of cooked on oil on the intake valves. You have too pull the intake manifold and clean them manually, which I haven't done yet. Or you can drop about $400 for an indy garage to clean them for you.
The car is a pleasure to drive, especially as a DD, although if I were to do it again I would get a 4 door instead of a 2 door. Adults have to contort a bit to get in the back seat, although there's decent room back there once they're in. I drive about 25K miles per year, so I've replaced the brakes and one drive shaft and both rear bearings. The other is being replaced soon also.
My car is almost entirely stock, and I've never flashed the chip, so I make stock HP/TQ numbers. On paper it's not so impressive (200/207), but it feels stronger than that from behind the wheel. I've almost never felt it lacked for power (and I generally drive like a bat out of hell), but I also don't track the car. It's just my DD. I'm also still on the stock suspension. The 06s have a higher ride height than the 07s and up, but I consider that a cosmetic issue, not a performance one. I could easily buy shorter springs for under $200 and lower it if I want to. Frankly, it seems like every MkV owner goes for the "slammed" look, so I feel somewhat different by bucking the trend. Plus I'm almost 47 years old, and I think I'd look slightly silly wearing a tie and driving around in a slammed DD. I also did not care much for the look of the car when I first bought it, but it has grown on me.
The interior of my GTI is very comfortable, and there isn't much in the way of hard plastics, which gives the car a "classier" feel. I specifically spec'd the cloth plaid seats (not available heated in my MY, but they were in later years). No question that VW interiors are nicer than their Subie counterparts, but that matters differently to different people. Personally, I can live with the downmarket interior without any problem. Somebody else doesn't like it; screw 'em.
My wife drives a 2010 Outback Sport, which is a pretty neat little car, IMO. My business partner has an 06 Legacy GT Spec B, bone stock, which is also a nice car. As some other have mentioned, the AWD is really nice in the snow. My wife's car, with snow tires, is an absolute tank in the winter. The GTI has never left me stranded either (I have a second set of winter rimes with snowies for both cars-can't stand getting stuck in the snow), but it clearly is not AWD. VW is selling a limited edition Golf R for 2012 which has AWD and extra HP/TQ, but it's priced in STI territory, and I don't think it offers as much performance in stock form, from what I've read about it.
A few years ago I bought a custom sub box with a 10 inch shallow mount subwoofer from a guy in the midwest somewhere who manufactures under the name "Uber Stealth". It replaces a piece of styrofoam under the rear hatch in the spare tire well and while it's not exactly a thumping, hip-hop chick magnet it adds decent low end to the stock stereo (10 speaker system). This is the fourth VW I've owned; the first was a '74 Super Beetle, I had a 97 Passat GLX (VR6 engine was pretty sweet) and the Touareg (incredible vehicle with scary expensive electronics that would have cost me a fortune out of warranty to repair/replace).
Anyway, that's just a little perspective from a current owner. YMMV.