It is an untuneable system once installed. There is no way to test speaker placement or how it will interact with the room. Without that, it is impossible to get a flat frequency response.
Once again, the best speakers in the world are only as good as the position they are placed in within the room.
I think this is false information and I see a lot of it from people who are into audio.
Room acoustics can be tuned and is constantly tuned by the people who care about their environment. While I agree it is always possible to get BETTER audio from speakers in acoustically matched boxes which can move throughout the room, it is flatly untrue that good in-wall speakers sound poor, and can't sound far better than many boxed speakers.
Speaker construction, size, and the ability to pivot the speaker for directionality combined with the room acoustics (not speaker acoustics) along with the construction design, or the potential for an acoustically matched backbox for that inwall speaker are all things which can, and do affect the quality of that speaker.
Once again, since most people are using their TV speakers, even the $40 jobbies from Monoprice are a huge improvement over what people have lived with for years and should be considered a very good thing.
But, products like this:
http://www.sonance.com/products/speakers/detail/476
which include a full MDF surround are designed from the ground up to provide excellent sound which is often barely being matched by the competition.
I think people have a tendency to overstate things like this, and apply scare tactics to how many speakers sound in a well designed space. Not that you are wrong to say that there are better choices, but to suggest that a speaker will be bad simply because it is in-wall is not at all accurate, and with some excellent choices out there which can utilize the wall cavity very well, it would be worth anyone considering in-walls to definitely give them a listen and decide if they want to spend all that extra money on a pretty cabinet.
Still, given the choice, the floor space, and the budget, I will go with floorstanding speakers in most spaces.