But the connectivity is just a small part of the whole solution. Most consumers would expect the whole thing to just work and it doesn't seem to judging from the difficulties expressed elsewhere as well.

You've pointed out the specific downfall, which is playback. The solution isn't "universal" if it can only handle a small number of file formats and codecs. Most consumers won't accept that the "universal" nomenclature applies only to the ability to see the shares on the network.

In the end what's supposed to be a simplification ends up being a complication in that one is stuck being able to play some files but not others, then being able to play a different set with yet a different client, etc.

And if that weren't enough, then even media playback applications that are otherwise decent at format support stumble on UPnP - Boxee for instance (reading some random sampling of forum posts). At that point one can just forgo the UPnP and just create a regular share which programs like Boxee or Plex will happily connect to and play from.

I keep reading about people trying to cobble things together along with fielding questions from friends about this type of setup. Some of these people are trying DVD players with USB, consoles and other pokey solutions like running apps on an iPod to connect to a music hare on a household PC. At least for music I can give them a universal answer - SqueezeBox or if you want a whiter-looking solution and private wireless network, Sonos. For video it's a little bit more mixed, but the only thing out there I can recommend with any confidence that doesn't use a PC at the TV is that Sage Extender box I've mentioned. Otherwise Boxee or Plex (which are both based on XBMC) seem to be the best bet.