It's a great site, but I agree that items tend to get lost there.
The other problem as I see it, is that because it is a somewhat specialized site, unlike e-bay, many people don't even know it exists. Sure it comes up in a google search on the first page, but most people I have spoken/messaged with have never heard of it. Once I tell them about it, and they check it out they love it. Etsy should get a little better e-marketing to generate more traffic. Most of the traffic on the site is from those trying to sell items. It should be the other way around.
Barry