These gondolas look like they can hold a max of about six passengers, but there's also a lot more of them. The article offhandly mentions a peak headway of thirty seconds. This implies a max capacity of 720 pphpd peak. For the same max capacity as current Blue Line service, we'd need to land a gondola every 15 seconds. The catch is that the Blue Line still has room to add trains, but landing a gondola every 15 seconds is probably pushing it.
I was expecting this to turn out rather poorly in the gondolas' favor, but considering the major advantages in capital cost, this actually doesn't look too bad. And they do have a point about high-frequency services attracting ridership. The main question is whether they can actually pull this off for the stated capital costs, and whether the operations and maintenance costs will come back to bite you later.
The best things they have going for them are that you can easily re-use existing right of way, and the per-mile implementation costs can be lower than conventional light rail or subways.
My favorite system that was spec'd but never built was the Chicago PRT (Personal Rapid Transit) which had four person 'cars' on a track that worked like elevators. You pushed a button at the track and an empty car arrived, you got in and punched your destination. It didn't have to stop until you got there. That particular system had issues with the amount of computer power it needed, although today it would be trivial to implement. If you can imagine autonomous vehicles on a track with 'smart' switches, its a lot easier than a self driving car.
Many would find that terrifying, so would still be trapped.
"the Rheinseilbahn ("rhine ropeway") can move 7600 people max. per hour in both ways, that's a world record at the moment. It connects two parts of the city across the river rhine. "
Although - having drunk people flying over your house during SXSW or Formula-1 weeks might not be attractive, because of uhh, biological contamination reasons...
You could walk for quite some time and never be at ground level. Most people can walk 1 km extra per day and never notice losing any time, given the savings in waiting for transit or getting into and out of a car.
The advantages often mentioned by transport planners are their cheapness to build and ability to traverse terrain easily (where trains and trams cannot). More importantly perhaps - people like them. Its a much better ride to work than on a subway or bus - thats for sure!
Vancouver's transit authority has been discussing the possibility of replacing the bus service to Simon Fraser University, which is on top of a mountain, with a gondola, as in heavy snowfall conditions the bus can't handle the roads. The main criticism of the scheme has been from property owners that would be under the gondola line, as they would no longer have any privacy in their own back yards.
Similarly if one had a downtown scheme, there would be the possibility of a full gondola moving by your 10th floor window at all hours of the day.
I think I've read about a train being build through a city somewhere, where it'd pass close by residential buildings, but only briefly. This was solved by installing "Smart glass" so they windows are obscured temporarily when going past the buildings.
I skied in Vallandry that season staying right near Peisey-Vallandry where the cable car station was.
If anything it made my skiing experience all the better as the resort was so much quieter than normal. We still had a large ski area to use (Vallandry and Les Arcs aren't small). Didn't care that we couldn't get over to La Plagne, Vallandry/Les Arcs was still as popular resort before the Vanoise Express existed.
 The other is clausterphobia.
To the commenters here saying "why can't they just make huge suspended buses", apart from the obvious engineering loads that entails, the problem is mostly that this means the gondolas have to stop at each "station" so that a decent amount of people can embark/disembark.
The most common modern gondola systems are built with MDG (monocable detachable gondola) technology, though the state of the art is the 3S (or TDG - tricable detachable gondola). More cables makes a 3S system more expensive, but makes the gondolas much more stable in higher winds, and allows them to travel faster along the line as well.
In these systems, many small gondolas flow in a continuous system, but are detached from the cable and slowed at stations so people can embark/disembark. This allows the main pull cable to always run at the same speed, which conserves energy and keeps all other attached gondolas moving. It also allows for corners (!) in the line (though a station must be located at the corner), as gondolas can be detached at a station, moved around by the required angle as they load/unload, and then reattached to the new cable which takes them off in a new direction. For a good example of this, see the Rio de Janeiro system mentioned above. Junctions can even be implemented this way if required (though the logistics would be interesting).
Rescue issues – most of these urban systems are designed to run over accessible areas, and no higher than 2-4 storeys from the ground, so if rescue is needed Fire Department crews can use standard equipment to reach the stranded gondolas.
Some commenters on the Wired article mention the Portland Aerial Tram system, and various disappointments around it. Aerial trams are different from gondolas in that there are normally only two cars, which move in opposite directions simultaneously, so each must be stopped at the same time, and any mid-point stations must be equidistantly located, unless you are happy having one car stopped in mid-air while the other is at a station. For examples of this with funicular railways, see the Innsbruck Hungerburgbahn  or the Wellington (NZ) Cable Car . The main limitations on this kind of transport are slow load/unload times (hence longer passenger wait times), inflexible station layout requirements, non-detachable gondolas means no cornering etc.
Someone mentioned the "scared of heights" issue – my partner is scared of heights, but she was fine travelling on a gondola system similar to all these at Taronga Park Zoo in Sydney, as well as on the Nordkettenbahnen, the aerial tram in Innsbruck that takes off from the top of the Hungerburgbahn. Of course, YMMV. A system that probably _isn't_ good for people with a fear of heights is the new Stanserhorn Cabrio (stunning pic ) .
For (even more) info, The Gondola Project website has a big section called "Learn about cable transit" - fascinating stuff .
 http://en.wikipedia.org/wiki/Brazil_with_Michael_Palin (Episode 3: The Road To Rio)
This sounds like a design challenge for a built in rescue system. Rope ladders, only somehow made much safer.
As long as the doors open wide enough, and the car is able to have floor-level loading, it shouldn't be a problem. Cars are able to be brought to a complete stop if needed. AFAIK, the only reason gondolas currently slow to “crawl” pace inside stations at the moment is that keeping some momentum means they require less acceleration to get back up to travel speed.
This solution avoids all the pitfalls associated with conventional rails (street level and underground) and I see it very rapidly becoming very successful.
I'm a little worried about new transit here in Austin for that very reason. Historically the city hasn't given me much faith to believe a new layer of transit would be implemented well enough to (A) get people riding it and (B) be remotely efficient.
Buses rarely sync up, you'll get off one bus just to see the transfer you need to catch on the other side of the road pulling off, missing your bus means getting to your final destination sometimes up to an hour late, the train only services downtown and north, meaning anyone south of the river is boned for rapid transit into the city...
I would absolutely love a new form of transit in Austin that was quick and easy to use, but I'm skeptical on our ability to actually deliver it, given our complacency with a rather poor and painful to use by system already in place.
I didn't mention it by name, but there it is in my post.
How do they fare in various types of weather? Are they heated and cooled? Would each car be camera monitored? This would be to monitor the safety of the people riding, for example if someone had a medical issue or was being attacked.
No, while I like the idea I don't see how you implement the cars which can be easily used by the handicap and that has caused all sorts of extravagant costs in our local bus lines.
Click on image search results.
Imagine all the crazy muni lines in sf turned into gondola wires. Would be pretty awesome to be "flying" 15ft above all the traffic. Not to mention the timing and schedule of service would be consistent.
See also Hypersonic jets that will fly at the edge of the earth's atmosphere and do London to Sydney in two years.
//edit//That will teach me not to read the article. I thought this was about airships.