Berkeley is not a place to go if you expect to be coddled, but very few people will be coddled for their whole life anyway -- might as well learn how to find your own way in college. There are opportunities in abundance at Berkeley, both the university and the surrounding area -- social, academic, athletic, etc. -- but nothing will fall into your lap; they are there to be found. I've grown to love the eccentricities of the city of Berkeley and the beauty of the campus, and very little can beat San Francisco in terms of the number of things to do. The that complain about the lack of entertainment are often the ones that haven't looked hard enough.
Probably the best thing about Berkeley and especially about my program (molecular and cell biology) is the fantastic atmosphere of undergraduate involvement in research. My guess is that most MCB undergraduates perform research in a lab at some point in their career here, and I feel very lucky to have been involved in research for the equivalent of nearly four years (I just graduated in December). Not everyone has a good lab experience, of course, and the positions can be highly competitive and difficult to find, but with persistance and dedication it can be done. (It also helps to have done well in the class of a professor you want to work with.) Many undergraduates are authors on original research papers, occasionally as the primary author. I believe that most MCB undergraduates go on to a higher degree such as an MD or PhD.
Unfortunately, this also means that the "premed culture" of competitiveness and grade hypersensitivity is predominant. Freshmen will always hear stories of the competition, some of which, surprisingly and unfortunately, actually have happened. Think lab work sabotage (which is in theory why they changed chem lab grades to pass/fail a few years ago), students who ask a question about the class to another student only to get a refusal to answer or a purposeful wrong answer, etc. I suspect the program has gotten better over the past few years, as I haven't experienced or seen any of this happen myself. For the most part, other students have been extremely friendly and helpful with each other, and I'm hoping that that's the real truth about MCB! There is, of course, competition for grades. You'll find the occasional oddball class where 30% (or more) of the class gets an A, but those are far between. For the most part, it's 10 - 20% A, which means a hard scramble for most people. There are also legendary stories about this, particularly in EECS -- such as the student that beat the average on a test by not taking it (the average was below zero because you earned negative points on the test by getting wrong answers, which most people apparently ended up doing). Or the entry-level calculus course where the professor failed literally half of the class (a couple hundred people) one semester. The good thing is that failures in math or science classes isn't terribly uncommon, so if it happens to you, you're far from alone! The other good thing about these stories is that it makes you a little more proud to finish Berkeley alive. Many graduate schools *will* take the lower rate of grade inflation into account during the admissions process -- as someone pointed out, the average GPA is 2.7 - 2.8, and a 4.0 really does mean something. There are many success stories -- it just happens to be the horror stories that are fun to tell...
Yes, diversity (or lack thereof) is a problem, but at what top school is that not true to some extent? The UC system took a beating from the banning of affirmative action, but I believe it's taken steps to improve diversity in other ways, and hopefully it will be better at some point.
For students that are highly independent and self-motivated, Berkeley is a great place to go. You make what you want of it here -- if you're not willing to work hard or find the opportunities that make it a good experience for you, whatever a "good experience" means, then go somewhere else.