We've been developing on Seam for 3-4 months now. Initially, we used client-side state since server-side was definitely broken (by whom, I don't know, but it was broken!). We developed a ton of functionality and client-side state was working great for us but we knew we'd have to switch to server side at some point.
About a month ago, we upgraded Seam (it was Beta 2 at the time) and switched to facelets 1.1.11. We tried out server-side state. Everything was still working just fine. Other than web.xml STATE_SAVING_METHOD, we did not have to change anything! I think you'll find similar answers from other users. As far as I'm concerned, server-side state works just fine!
I recently updated the documentation, since it seems that server side state saving is working much better in recent releases of JSF implementations. I can't promise no bugs, but I'm not aware of any known bugs.
I'll sleep better at night now