Nortel has a number of problems, in my opinion, not the least of which is that they suck as a company. They suck so much they should rename the company to "Hoover".

They have too much of the old telco mentality: "This is the way we do things, and that's that. If you don't like it, tough."
They just can't compete when it comes to supporting their customers. I'm not sure Nortel even understands what customers actually want.
We've had a rocky relationship with them for a few years and it completely went into the tank after they lost our VoIP RFP to Cisco. Just this week, Nortel completely cut us off from local support. We are not allowed to directly contact the local Nortel office of any assistance, and they will not do anything for us beyond what is called for in our service contracts. All of this because they lost an RFP. But we're still customers! We still buy Nortel stuff, at least for the time being. We've bought three Option 11Cs this year, plus lots of phones. And we still have service contracts for Meridian Mail, our 81C, and Symposium. You'd think they'd treat current customers better.
On the technological side, they can't decide what direction they want to go in, at least with regard to VoIP. They've changed directions so many times in the last four years that it's difficult to be certain that they're going to stick to their current roadmap.
Besides, their VoIP stuff is too closely tied to their TDM stuff and much of the configuration is the same. Have you ever tried to configure a Nortel PBX? It's a nightmare...total alphabet soup. We wanted something a little more modern and we liked the fact that Cisco was able to design a new system (or buy a system <g>) that wasn't tied to old TDM technology. Cisco has no old TDM-only customers that they need to support like Nortel, Avaya, and Mitel do. They had the opportunity to design a completely new system with a new mindset, and we like what they've done with it.
Nortel really sucked in the area of disaster recovery. If you need true multisite reduncancy, it's going to be VERY expensive and complicated. With Cisco, it's a piece of cake. You just geographically disperse your servers and make sure they can talk to each other over high speed links.
Cisco can be kind of pricey. Their phones are way overpriced. Even the refurbished ones are expensive but they're about $100 to $150 cheaper than new phones after you include licensing costs.
All in all, the Cisco solution was a better fit for us, but they're also a better company to do business with. We always asked ourselves who we wanted to be "stuck" with for the next 10 or 15 years. If you phrase the question that way, Nortel definitely isn't going to be a good answer. I'm not even convinced they're going to be relevant in another 10 years.