I'm using an early 2008 iMac with Lion, and would have to agree with you that Lion's got some issues. From what I can tell, based on these forums, is that this OS is on par with all the bugs present when Apple released their Leopard operating system.
My experience so far has been mostly pleasant. I've had Safari lock up twice, but really nothing else while in operation. I have experienced considerable trouble waking the iMac from a screen saver mode, though. In my case, I'm using an iPhoto screen saver, and, when I try to "wake" the iMac, the screen saver stops animating, but nothing else. What's strange is that the login options are "underneath" the photos, and I have to "reveal" the login options by "painting" over them with the mouse to reveal them.
All in all, it's an "OK" upgrade, but I think it's VERY processor and/or graphic card intensive.