I had an S90, and although I never got the dreaded lens error, mine frequently produced blurry shots of distant objects even in good light and the auto focus indicated that it was working. I sent mine in, paid the $150 service fee, but found it started doing the same thing again. It was an intermittent problem, so hard to know if the expensive fix worked at all. I sent it in again a second time and, to their credit, they "fixed" it again for free, but in just a matter of weeks I encountered the same problem again.
I fear this may sound like user error on my part, but I'm quite confident I was using it correctly.
Anyway, and I recognize that my experience is just a single anecdote, but I came to the conclusion that the small size of such wonder cameras comes with tradeoffs in terms durability.
I'd still be using my S90 to this day were it not stolen from a checked bag in March (long story -- no lectures about checking electronics, please!).
I thought long and hard about replacing it with the updated S100, but I couldn't shake my sense that these cameras are too delicate and decided to accept something a little bigger.
I ultimately chose a Fujifilm X10. It's considerably bigger, but still small enough for my handlebar bag or, even better, slung over my shoulder while riding. (I tried using a Sony NEX with kit zoom, and although it isn't dramatically bigger than the X10, I found it just a bit too big for my style of riding... too bad, too, because the APS-C sized sensor is quite appealing!) Notably, the zoom on the X10 is entirely manual -- no motor moving the lens in and out when it starts up. I'm very happy with it so far.