I lived in Lyon in 2005-6, when a similar scheme, Vélo'v, was being implemented. It was interesting to see the rise, fall, and rise of the scheme. At first, everything was great. Then it seemed that the bikes were always damaged, the software that controlled the docking stations was buggy, and it was almost impossible to get a working bike. Then they upgraded the bikes, increased the repair schedule, and fixed the software, and everything was great again.
Maybe it worked better in Lyon because there is less of the inner city/suburban divide, no major immigrant slums etc. It really was a brilliant system, that cost virtually nothing. In fact, for a 5€ annual fee, you could hire a bike for up to an hour for nothing...then return it and hire another one for up to an hour, etc.
I can't imagine wanting to steal one of those bikes though. They're incredibly heavy, and handle badly due to all the electronics being in the handlebars. They only have three gears, and just aren't built for anything other than short inner city trips on smooth roads. Of course, I did the same thing as the vandals in the newspaper article - riding down stairs, off kerbs, skidding etc. It was fun!
I think everyone is reading too much into the newspaper article. All it's saying is there are problems that are expensive. It's not like they're canning the program or anything.
Also, for anyone thinking $3500 is not realistic for one of those bikes...well, you should see them. The term "industrial strength" doesn't do it justice. They're incredibly strong, have some fancy electronics in them, are all custom components etc. A "normal" bike wouldn't last more than a week.