I haven't noticed any sluggishness with the newest version of the QT client, and I now have a wallet with 50K addresses in it. Also the wallet is only around 7MB. The real problem with the official client is the amount of time it takes to sync after install. That by itself will hamper the adoption of bitcoin by the general population. Although alternatives are available that make the use of the official software unnecessary, a casual user that goes to the bitcoin main site and downloads the software will be immediately turned off and may not bother or even understand that alternatives are available.