Here are current thoughts:
Clickonce doesn't work with Firefox unless you are using .net 3.5 SP1 or the firefox add-in.
x64 doesn't work with .net until version 3.5.
Installing .net 3.5 SP1 on a Vista machine that doesn't have it can take as long as one hour (in testing I have done on reasonably average machines), during which the user is offered little or no feedback. Lots of opportunity for the user to wonder "Is this working?" ... "Is this doing anything or has it crashed?" etc. I think a typical user might easily give up and reboot.
Clickonce is not able to update only changed components - it must re-download all components, even those that have not changed.
Vista already has .net 2.0 and 3.0 pre-installed - big incentive not to put users through the pain of installing a version other than these they already have.
XP users more likely to have 3.0 installed than 3.5 or 3.5 SP1.