Our company started using it around 1995. We began phasing it out about 4 years ago.
[Editing to include the team as it was a "we were burned", not "I"]
Yes, We've been burned several times.
- Spent 2 or 3 weekends in the office baby sitting repairs on the repository.
- Spent 1 weekend about 5 years ago splitting the main repository into sub repositories because it finally got to brittle.
- Spent countless hours manually branching and re-basing code because VSS won't reliably allow this.
- Have lost some time due to corrupt files but that was years ago and I don't recall the details.
- Had to waste time and gas (there fore emitting CO2...) to drive into the office on nights weekends (during crunch time) to check-out files or view history because using VSS over a VPN is possible only if you wait 2-10 minutes per folder click.
As far as versions go, it was my understanding (correct me if I'm wrong) that 2005 was the last update and that was mainly on the client. The back-end (the critical end) is still a decade old.
If I think of more, I'll edit the answer.
BTW, I'm now a happy user of SVN.