Since then, it's fluctuated in its rate of evolution relative to the industry standard. It always had cutting edge features, but they were trapped behind a troublesome UI, while the big competitors made their tools ever easier to use.
In recent years, the gap has been drastically closed due to a ground-up rewrite, completely new approach to the UI, and a tremendous effort to modernize.
Unfortunately, Blender still has a bad reputation, a legacy from the previous design. What's more, many studios and schools have firmly entrenched workflows, or depend on custom extensions written for a specific tool.
On the other hand, Blender seems to be enjoying popularity in the booming indie games community, where it integrates well with other free tools like Unity 3D.
With the new design, I wouldn't be surprised if Blender's best and most-popular days were ahead of it. I see share growth coming from individuals looking to make great graphics on a shoestring budget, as opposed to big studios or schools adopting it instead of Maya or Max.
I would argue that it is now roughly equivalent to those other tools in terms of features and usability. So, no real reason to switch (which requires expensive adjustments to existing workflows), but great incentive to adopt it in the first place (because it's free).
Blender 2.4 also let scripts create UI components, such as entire control panels to influence the running script. The last time I checked in 2.5, this was either not possible or not well documented. But I'm not up to date on this.
I'm also not familiar for comparison with the scriptability of Maya or other tools.
There is some lack of consistency between the different approaches, not just in the languages but in the presentation of the underlying data model, which isn't always helpful. Still, as a guy with a programming background, I actually found it easier to figure out how Maya works by playing with scripts and the underlying object model than by experimenting with the user interface. :-)
I know some 3D guys who prefer the way Blender handles a lot of basic modelling tasks. Others prefer Maya. I get the feeling it's a lot to do with what you're familiar with these days, because they're both quite capable in terms of functionality but they both have quite powerful, complicated user interfaces.
Unless something changed very recently, Blender still can't use FBX files properly. That alone is a deal-breaker for a lot of projects because FBX is very widely used in the rest of the industry.
Also, for all the talk of community around Blender, Maya still has a far bigger user base and far more professional-level tools you can plug in if you need more than the standard offering.
On the flip side, Blender is free and Maya costs several thousand. And to get Maya you have to deal with Autodesk, whose approach to customer service appears to be that they don't provide any. And the last two major releases of Maya have been absurdly buggy, to the point that Maya 2012 is already on 4 hotfixes and counting.
<<< - Texture display in the viewport. Somewhat amazingly, Blender doesn't seem to support this. When you're doing UV editing, you can see the polygons that use the UVs you're editing mapped with the texture you've selected as being visible in the UV editor, but that's about it. The sort of textured display that I'd expect, where all polygons are displayed textured with the texture(s) from their material, doesn't seem to exist.
- No N-sided polygon support. Yes, seriously. Quads or tris or nothing! So I think there's a mode where it works like MAX, where it works in tris but hides some of the edges to fool you (N-gons I think they call it), but I couldn't work out how to make this happen. (And there's some guy rewriting the mesh editing core to support N-sided polygons, but it's not done yet.) This caused me a big problem: Blender kept getting in my way! No way to create a rectangle with 6 verts, that's going to get an edge in the next step that splits it into two, because Blender will turn the intermediate result into triangles, forcing me to clean things up -- an extra step, that I didn't want, nor did I need. Now, maybe there is some special tool that I should be using, that does this in a Blender fashion -- but, seriously, I don't care. I can do things my way in every other package. >>>
Blender is one of the very few programs that has successfully moved me to tears of sheer frustration (funnily enough, I am very unlikely ever to try using it again), but plenty of people get on with it fine so it could just be me.
Regardless of my own inability to get to grips with it, I did think that the two limitations I describe above are kind of ridiculous for a 3D modelling package in 2010 - and I still think that. Every other package I've used just lets you jump in and create polygons with as many edges as you like, and shows you each material's texture in the viewport as you do it. Even if you can jump through some hoops to ge blender to do that too, that's too much - these things are basic features...
N-sided polygon support will be there in 2.62
Just compare the price of other packages ;)
It's been a long, long time since I understood 10% of what a production-class modeling and animation tool can do, but maybe someone here knows:
How does Blender compare to Maya, for example? What would this project need to achieve before folks would start switching?