When Arduino 1.0 was released, the "String" class was faulty due to compiler/library problems and could easily create wrong results and programs "hanging".
This problem was fixed at some point, I think with release of IDE 1.0.5.
So at least the "String" class is working "error free" now, if that was your question.
But of course "String" is BAD BAD BAD, because of:
- using more RAM than actually needed to solve any problem
- encourages programmers to write programs that eat up more RAM than is actually available
- slowing down program execution which might be bad if every microsecond is counting in your application
- fragments RAM, so that after some time of running an application the RAM could be fragmented too much, so that no "String" of certain length can be allocated any longer.