The 5 is totally worth the upgrade from the 4S if the following things matter to you...
- LTE data speeds (there's seriously NO comparison between 4G and LTE, like a tricycle vs. a space shuttle in terms of speed)
- Larger screen (this was hit or miss for me initially, but i do like the slightly stretched setup, using the old smaller screen is weird to me now)
- Faster processor...there are times where this is plainly obvious (in certain games especially) and times where it feels the same.
- Better camera...the iPhone 5 has a better camera (front and back), period. It's more stable on videos, has better color balance on pictures and takes faster photos.
- Smaller and lighter. It is significantly lighter than any of the other phones on the market, including the 4S...not to mention being a lot skinnier. The weight is perfect to me.
...all in all, i love the design and form of the iPhone 5, and LTE is the icing on the cake...those two things alone make the iPhone 5 well worth the upgrade.
As far as software and hardware issues...I'm not experiencing any with mine, it's running like a champ with no issues. I never had any hardware issues...perfect out of the box.