Another problem is that it needs gateways like exchanges by bitcoin and actually there only one gateway.
Without gateways to fiat you cannot transfer fiat money just Ripple.
You can also "ripple" IOUs in any currency through your private trust network. Eventually gateways will become hubs that will connect everybody easily, but you can get started without them. It's a pity the existing gateways only accept IOUs for the USD and not for other real world currencies.
A virtual currency based on USD or EUR already exists. Liberty Reserve (USD and EUR) is easier than Ripple and it is also centralized but at least you don't need to install a closed source software where could be anything.
Ripple is an overkill for this purpose.
A total decentralized virtual USD could be constructed with the bitcoin technology with colored coins on the top of bitcoin or namecoin.
Thrust network:
If you thrust in somebody then why do you need Ripple to intermediate ? If you friend or your neighbor want to borrow 1.000 $ from you why would you need Ripple for it ?
A more complex thrust network for an organization or a religious group can be built more reliable with colored coins on the bitcoin or namecoin network as stated above.
So the problem which exists by bitcoin with exchanges by Ripple is even worse at the moment it is just hidden by the complexity of the system which is difficult to understand.
As far as the mechanics of the payment system go it is better than Bitcoin, but it suffers from the same lack of adoption by real world merchant. However, I expect it to grow much more quickly since it can provide cheaper and more convenient payment services than traditional systems in any currency. The extreme volatility of BTC is a major impediment to its adoption as a payment system. Ripple allows you to avoid that risk by using fiat currencies. Adoption of XRP might also be easier because I've heard they are trying to stabilise the exchange rate, which they can do to a degree because they hold the bulk of all XRP that exist and because XRP reserves are needed to activate accounts and use their functionality.
But the killer app for Bitcoin users is as a decentralised exchange for BTC.
I am not sure if it would be more decentralized than a Liberty Reserve - Bitcoin exchange. As long as Ripple is controlled by somebody he can be forced to cooperate with the authorities.