PS. This is not a new initiative, but a well-established project that recently reached a new milestone: 220,000 is the number of school PCs already running a local flavor of Ubuntu in Andalusia, Spain.
 For instance, see http://news.ycombinator.com/item?id=3787539
Edits: reordered and expanded sentences to present my views in a more organized manner.
Microsoft gives 90% discounts to EDU...
The biggest problem is the teachers, they are not as tech-savvy as the kids and introducing them to a completely new operating system has done nothing but slow them down and cause problems. They are having trouble distributing learning material because they are not familiar with the file formats (and most of the students here are using windows, so compatibility is a problem).
There have also been problems with the personal storage spaces students have on the computer network, people are sometimes unable to log in or unable to access their files. It's been a mess.
I'm all for supporting ubuntu, in fact I've been using an ubuntu variant on my laptop for a few years now without any trouble, but using Ubuntu (or any other OS that isn't Windows or OS X) in a school environment just to cut costs is a recipe for disaster.
The other day I chatted to a governor of one of our local secondary schools, which recently upgraded from Windows XP to Windows 7. As you note, the teachers aren't always tech savy and many who primarily used computers at school (on XP until then) struggled with Windows 7. Compatibility with very old Word docs created on the old systems was a problem (solved by using LibreOffice on one of the staffs personal laptops as the IT contractors wouldn't allow it to be installed on the system), and pupils/parents who use OSX at home also sometimes have difficulty with homework assignments when particular software and/or formats are required.
The trouble is we live in a more and more diverse computing society. Windows is no longer the dominant OS, OSX and to a lesser degree Linux (and iOS and Android etc. etc.) are becoming more and more prevalent.
The general solution, is either to
a) invest in training for teachers and design curricula to be OS/vendor neutral, or
b) standardise (if one must) on an OS/app ecosystem that both the school and parents can deploy and support (which apart from private schools with moneyed parents) means a free OS.
it's a chicken and egg problem. the only way to solve it is to make the first move, otherwise in 10 years we'll be in the exact same situation.
Even for worse... no one in the school had the Root password... oh, the horror.
My high school (2005 IIRC) had guadalinex  on all computers, with a 2:1 student to computer ratio and no in house IT. Students basically use Firefox, OpenOffice and some other apps for math and psychics, there's not a lot that can go wrong and nothing is so important that you need a person always on site.
It might not save in the support cost, I agree - but barring a (potentially uncomfortable) transition period, it shouldn't cost more either.
It is my experience (from industry) that a competent Linux admin can support about 10 times as many machines as a competent Windows admin, but only costs 2-3 times as much; However, competent linux admins are much harder to find.
The other 5% are those that need certain specific apps that have no real equivalent on Linux, but as more users switch developers will port those apps, just look at Valve.
But one problem that is more complex than most people think are governments: those that get the most from free software are governments from poor and developing countries, but when you go there you find that most of those governments use Windows and even bought the classmate netbooks from Wintel instead of the OLPC or even regular netbooks with other Linux distros.
Now, this might not be the case with every country but there are reports of corruption in the process. Can't say if Microsoft or Intel are actually paying bribes, but there's proof of middlemen and officials from governments of those countries choosing Windows above Linux because that way they can easily inflate the cost and get a bigger cut from the government contract.
It's no different from public works going way out of budget: most of the time is because someone is stealing money.
- Terrible WiFi performance. Had to find some other drivers and then edit some file to add some magic names to some sort of blacklist so the drivers I found could actually be used. I have no idea how I even found all this.
- Graphics drivers appear to be software only. Find something called the closed source ATI drivers (Catalyst panel included). After installing, Chrome still refuses to run WebGL, and has all sorts of crazy bugs rendering normal web pages.
- Mouse and keyboard apparently freeze after 20 minutes or so.
- Sleep and hibernate are iffy at best, sometimes after waking up, things will just fail or misbehave. One of the things it tends to do is think the battery is critically low even if it's completely charged, something like it thinks there are two batteries and ones is missing.
- The bluetooth util finds some devices (phones mostly), but ignores my lovely bluetooth mini-mouse. Looking at logs, it seems the Bluetooth driver dies during boot.
- Open text-mode vi from a terminal, move with the arrow keys, and I get strange characters. FFS it's 2012 and THIS crap still happens? (Note: bash works fine)
- When I tell it to shutdown, sometimes it does nothing, sometimes it closes the active window and does nothing else, sometimes it actually shuts down. That's from the menu - closing the lid or hitting the power button behaves different each time.
- ACPI function keys: some work, some don't.
Linux has come a long way from the old days when we installed from floppies and hand-edited clock frequencies to set up a graphics video mode, and if I really need a fully functional Desktop Linux box, I can research the right hardware to buy and the post-install fiddling to make it happen. But let's not kid ourselves about the typical experience awaiting Joe PC User.
Look, sometimes people have a lot of issues with Windows too. No OS is perfect. But those are not very common instances. I think you are just not lucky.
There's certainly a high level of ignorance amongst teachers as to what OS they're using, but that mirrors society in general - and in most cases if you give them a system that works, with the software they need, they'll learn it pretty fast. I don't think they're "hooked up" to Windows in particular, I get the feeling the word "Windows" basically means "operating system", it's a generic word without any real tie to Microsoft.
What I do find surprising is the number of computers per school, in Andalucia - 110 workstations per school? Seems like a lot, and knowing the local politicians it wouldn't surprise me if 50% (or more) of them weren't "virtual"...
But seriously it's nice to see some governments want to break their dependency on Microsoft.
It almost doesn't matter—they don't need anything but a browser these days.
Sure, assuming you only want the next generation of young adults to be able to look things up on Google and use Facebook.
When my school tried to teach me how to use MS Word (I was 13) I laughed. I already knew everything there was to know about it.
Of course none of this was innate, nor did I know it just because I was young. Eight years earlier when I was having my first play with computers (much to their detriment) and I would play, yes play with word processors. I didn't have anything to write but I learned WordPerfect. I learned MS Word. Hell, I learned most of MS Office and several versions in-between my first encounter and my Year 9 ICT training.
The newest generation is growing up on touch devices. It's great for the arts, I suspect but it's the end of kids who'll just load up a Word processor just to see how it works. They'll need to be taught.
There's quite literally an app or site for almost everything on the internet.
It's great that you think your curiosity and drive for knowledge is somehow unique in this world, but I suspect you're wrong and just have a damn-kids-get-off-my-lawn mentality. The web has only made knowledge and possibility more accessible, not less, and it's naïve to think that it's a dumbed-down version of the "incredible software" you grew up using.
Okay, perhaps that is my "damn-kids" mentality but design and interface metaphor have totally kicked function's ass in the past five years. You don't have to look far to see some major examples of that (Win8, Gnome, anything on a tablet/phone). The applications I'm talking about can only be consider equivalent to a point.
So yeah. In terms of productivity (and useful life skills) the software I grew up with is better than what a kid with a tablet has today.
I also used to really love browsing Encarta 95. I do look up a ton of stuff on Wikipedia these days but I rarely go there without direction.
Besides, since then and between PHP/Python/etc shared hosting and tools like Codeanywhere (which can talk to S/FTP servers), a web browser is enough for building web applications.
(Of course, the web is far from reaching the potential of desktop development, of course. But it has come a long way already)
Neat! I eat my thoughts (It's the kind of thing I miss by using vim for almost everything).
EDIT: But it is a separate app...
"The script editor can be accessed directly at http://script.google.com, or by launching it from one of the Google products which support built-in access to the script editor, such as Google Spreadsheets and Google Sites."
In Spreadsheets, you just need to go to Tools → Scripts → Script Editor.
If you're the kind of person who looks under the hood, you're going to do it regardless of whether you're working on a desktop word processor or a web app, and it is my strong opinion that these kinds of intelligent and curios people are still coming into this world.
Central provisioning, deployment and higher level support costs are centralised and do not scale as fast as user facing support. These areas are typically contracted out to (or supported by) the OS/app vendors, and such cost is a smaller part of the deployment/maintenance costs.
Large enterprises perhaps do not work in this manor and have often have direct per-seat support from vendors, but public organisation are generally organised as I outline above (at least over here in Europe).
On the other hand, Windows comes with pretty good self support for the end user out of the box via multiple professionally developed and maintained channels.
All that said, for high school level essays, slides, spreadsheets, where you are not really interfacing with government or businesses, then the argument for OpenOffice is overwhelming. Even more so when your government can't even afford to borrow on the open markets. I.e. no private investor in the entire world thinks you are credibly going to pay back what you borrow. In that case you have to go to political allies who are prepared to shoulder the costs, for political and not economic reasons, and it might be a good idea to take the 90%-as-good free office package for your school students to contain costs.
It doesn't matter if the teachers are clueless, some of the curious kids will start messing around with the command line, and a whole new world will open for them.