I have a Canon EOS 550d with the 18-55mm IS kit lens. I have done quite a bit of shooting with it over the last few months (portraits, nature, night shots etc), and find the image quality to be pretty good. In fact most of the reviews have also been positive (at least in terms of image quality):
indeed Canon's main concern may ultimately become whether users have as much incentive to upgrade to more expensive optics as they did before
DxOMark comparison to the Canon 17-55mm lens
So, what are the key limitations of this lens (or any other similar kit lens) that would compel one to upgrade to a more expensive general purpose zoom lens (apart from the wanting to upgrade the zoom range)?