An alternative explanation for 'all games are free to play' is that all the games have trials. Great. Know what platform does that already? XBox Live Arcade. Are all XBox games free to play now too?
Assuming OUYA will be exactly like past consoles is foolish. It's different in one significant way: It's on Kickstarter. To say that this will have no effect on the Kickstarter service if it fails is naive. Sure, you can say that Kickstarter's terms of service will protect them (I think this is probably true), but the people who fronted $100 or more to get a console will not be happy if things don't turn out as promised.
I never questioned that something like the OUYA is worthwhile, I questioned whether the $99 price point was realistic. You could certainly deliver it at a price point of $199 or $299, but at that point you've now gone back on one of the central promises of your marketing campaign. When the press talks about OUYA, they talk about the '$99 console'. This is not a minor detail! And if you really just want it to watch twitch.tv streams, there are much cheaper ways to do that - it needs to present a compelling, complete ecosystem.
Saying that major design oversights like insufficient storage space 'can and may well be fixed' is missing the point: The specs they currently promise are basically what you are paying for if you donate $99 - you can certainly ask them to improve it, but they are of no obligation if you decide the current specs are enough to get your money. Addressing these problems would impair their ability to deliver at their current price point, and as I've said above, increasing the price point is risky now that they've already accepted donations from backers.
If they had put this console design out to various developers for feedback, they would likely have gotten lots of useful feedback along the lines of mine with far reduced (if nonexistent) cynicism. In my case, I would have gladly given them the same feedback plus more, and been very positive about it.
Instead, they listed a bunch of 'big name' android games in their marketing, when in some cases - Mojang, for example, as noted in the Kotaku story - they hadn't even contacted those developers in the first place. Sure, they have beaming quotes on their kickstarter page from real developers - but all those quotes say is 'this is a great idea, we might consider building games for it'. This is an utter failure of community management and developer relations, plain and simple.
You can say the controller is a prototype - someone says that it appears they actually do have button labels based on some promotional app screenshots - but even so, it's again a question of whether they're actually serious and prepared: These prototype shots are the thing they're trying to get you to pay $99 up front for. Why would a colorblind person pay up front for a controller he can't use effectively in the hopes that maybe the developer will fix the design? Are the screenshots clearly labelled "prototype not representative of actual product"? No.
It may be true that they never use the words Android Market, but they certainly push hard on the fact that it is a hackable android console and all the games they showed off in those promo screenshots are android games from the Android Market. If they don't have Android Market shipping on their console, the only other ways to get those games on the console are to make deals with the developers (as noted above, this does not appear to have happened) or to encourage people to pirate the .apks and install them manually.
And to quote the Kotaku article again (because it's one of the first detailed articles that showed up about Ouya):
"The Ouya team assumes that they'll simply be awash in, at worst, top Android games. Uhrman doesn't want to settle for that. She wants to use part of the funding for the new console to fund the development of games."
I'm not even going to pass a judgement on whether OUYA has a killer app or not. The two games you mention do not have Android versions you could install manually on the device (with or without market), so I don't see why you think they will work on the device out of the box. In the case of Spelunky, your only bet would be to hope that someone ports the original Game Maker version of the game to Android and releases it in a version that you can install on your Ouya.
I agree that the console has lots of potential. I think they're squandering a lot of that potential through early marketing and clueless developer relations, and people are letting them get away with it - to the detriment of both sides.
I spent a good hour just reading your two original comments (not counting time spent writing the reply) to really understand your points as much as possible, so I could write a reply that would make you go "ah, I see what people see in this now". I gave you as much the benefit of the doubt as I could, so it really shakes me up that after all that effort, you take my points, twist them to make me look like a fool and use them to reinforce the one core point which I agree with you on: that there are a lot of practical issues that need to be addressed before this has a good shot at success.
I tried to give a reply you'd really appreciate and you punched me in the gut with it. I'm sorry for responding. :(
EDIT: I just read your newest reply properly (I couldn't do that before because of how upsetting it was to me); I just realized you're coming from a this-is-how-it-should-be-marketed viewpoint, while I'm coming strictly from a how-much-would-I-want-this viewpoint. My comments were just points on why people like the idea and want it to succeed, not on their marketing and relations; I'm no expert on either field and as such I have no desire to critique them. Looks like we were just talking on two different wavelengths; a simple misunderstanding.
I'm the sort of guy who automatically assumes marketing and advertising makes claims that are too good to be true, so I'm not fussed when they don't all pan out as 'promised'.