The biggest problem I had with HO was the inconsistency of everything. Standards only work when everyone adheres to them strictly without inserting their own interpretation. Such is the price of incredible diversity. Couplers and track work was the worst - it was like everything had to be perfect or else chaos would ensue. With O gauge, I can couple any two cars from any two manufacturers and I can reasonably expect them to stay coupled until I dictate otherwise. Likewise, if I leave the room for 30 seconds, I can reasonably expect things to be more or less as i left them albeit in a different spot on the layout. No such guarantees in HO - if I left a train running for more than 30 seconds or so, it was anyone's guess as to what state I would find it in upon my return. Even between cars and engines of the same manufacturer, I had problems. I call support, and they tell me to "shim it". I just spent $350 on your E8 A-A set, how about you 'shim this'...
To me HO is modelers gauge first and foremost. Everything is at your disposal but you have to know how to make it all work together. If you do, it can be very rewarding. However, if all you want to do is have some fun, make some noise, and run some trains, it can be beyond frustrating. Don't get me wrong; there are plenty of incredibly talented modelers in O, but you don't HAVE to have the skills to have some fun.
Oddly enough, I never had any issues with N scale and I still have some of it around. I can slap together a nice Unitrack layout on the kitchen table in about 20 minutes and tear it down in less than 10. I think the Unitrack saves me here, because it's very precise by nature, and I stick to Kato across the board for almost everything.
I'm still not sure where S gauge fits for me. It's a great size overall, but do we really need another gauge. I know S is classic, but I worry that ultimately the market won't support it to the point where it becomes interesting to me. There's just enough diversity and support in O to keep me involved, and if I decide I want more at some point, I'd probably go back to HO hopefully having learned a few lessons from my first foray.
As far as "space savings" is concerned, I contend that it's all a big myth. Yes, N and HO are smaller, but you run longer trains and create more complicated layouts. My train lengths have always been dictated by what I can jam into a siding - if it's 10 cars in O, then that's what I use. If it's 20 in HO or 35 in N, thats what I use. I think most of us tend to expand into whatever space we have available regardless of gauge. Very few people into model railroading acknowledge the concept of "enough" space. It's an enigma - there is never such a thing as "enough space". Same goes for cost savings - 20 HO boxcars or 10 O? Pick your poison.
I do wish we had more modern-era representation in O. I have ExactRail stuff in N, and I love it. Had some in HO as well, and it was good stuff. But scale wise, the new stuff is largely... large. How much of it could most of us fit on the layout without chasing the tail? To me, an O gauge steamer pulling 10-15 boxcars looks reasonably realistic on my layout; a 5 car intermodal drag with a single engine kind of feels/looks ridiculous. If ExactRail did bring some of their toys to O gauge, I would 'want' them, but I'm not sure I'd buy them
Wow... that was probably too much.