Free software is very important (IMO) but has severe deficiencies because it lacks the straightforward economic incentives of closed-source software. So we'll probably never have fully free software consumer goods companies that are really exciting and innovative (think Apple), it is basically just used as a complimentary good.
Businesses only interest in free software is when it complements their products and they don't have to give up any strategic advantage. Web browser rendering engines are a complicated mess and nobody chooses their OS based on web browser alone, so Apple starts with KHTML and now continues to develop WebKit in the open. Google makes money on web advertising so they give away Android and ChromeOS for free and contribute to many free software projects (MySQL, Linux, ffmpeg, etc) that their products are built on top of. Web developers frequently use free software for all the back-end stuff because it not really a differentiating component of their business. And so on.
If governments and non-profits start focusing on supporting consumer-facing free software (like Office, the desktop environments, and other user applications) then that will shine a bright light on deficiencies and will help us improve these core free software products that are important to the largest number of people over time.
As a side note, I used to be envious of OSX and iOS and the app store and Apple's hardware and many of the beautiful applications for OSX and wished there was a way for similar quality products to come about in the free software world. I don't think the incentives of free software would allow them to exist in that world, though.
But LibreOffice demonstrates a huge win for a community-led project too: if the current maintainers try to move the code to a closed-source pay model, the project just forks.
I agree that LibreOffice hasn't achieved fit and finish, and I'm trying to be patient with that. I'm just happy it has survived. I think a huge downside to any closed-source project is when they end-of-life it. That could be simply because a new version is a ground-up scratch rewrite. Once the code is thrown away, all the effort to build it is lost.
A few French administrations have been using OpenOffice, since back in 2005 ([0] has a few figures, which add up to at least 200,000 installations), and USB keys with OpenOffice (and a set of other free softwares) have been distributed to high school students since at least 2007 (the articles at the time were planning only initially 173,000 keys, though. Edit: it's 800,000 keys on 4 years, which explain the numbers).
[0] http://wiki.services.openoffice.org/wiki/Major_OpenOffice.or...
What? Why? Just to waste money? CDs are cheaper, and are not going to be infected with a virus if the student passes it on.
But they really couldn't just do electronic delivery? The students are going to take the USB key, erase it and "free usb key" courtesy of the gov.
Anyone who would actually install it would also do it from a paper flyer with a url of where to download it.
Practically, I don't know how it turned out. I can't find any studies or numbers on the actual effect it has had.
