Most SD and μSD cards have embedded microcontrollers http://www.bunniestudios.com/blog/?p=3554 — I wonder how much of the corrupted-sector problems you were getting are really just bugs in their firmware? Or things that could be worked around with better firmware?
Yeah, it was almost certainly firmware bugs combined with already marginal NANDs. ie. the NANDs probably would have been fine if they were babysat a little better, but they were probably bottom of the barrel. That's kind of the SD card market in a nut shell any way.
That being said we tried many different SD cards from quality vendors and found pretty heavy bugs and performance related issues among all of the non "industrial" versions.
So, yes, the problems don't have to be intrinsic to the form factor, but empirically you're more likely than not to have issues with them.
