You're correct; they did patch and update it to fix various issues. They didn't abandon it or anything.
The thing which bugged me the most about Vista was that it was slower than XP. Significantly. And for no apparently good reason. From a user perspective, it did mostly the same stuff, but required so much more resources in terms of CPU, RAM, and GPU. Going from Win 98SE to XP wasn't like that at all. XP did need more RAM, but it ran faster and was less buggy. Apps and games ran on it fine.
IT shops I worked at avoided Vista like the plague, and so did many businesses. The general consensus was that it was slow, something I and many fellow IT workers experienced whenever we used it. All of us waited for SP1, and when it came and did really nothing, everyone basically went "Well, XP until Windows 7 comes out!".
Plus its UI was annoying. "You just told me to do something. Are you sure you want me to do what you just told me to?" YES/NO dialog boxes everywhere. Great for someone whose never used a PC before. Terrible for anyone who has more than a year's experience. UAC was a mess. Yes, you could fix most of that by tweaking the OS, but there was no way to get your settings to easily follow you around PC-to-PC outside of roaming profiles via Active Directory. The default out-of-the-box experience was terrible compared to XP.
Microsoft never issued a patch to fix any of that. They can't; once they ship an OS they sign an unwritten agreement with IT shops and developers saying "this is the standard until Windows 7 comes out". That's a good stance to take sometimes, but not if your root standard is terrible.
The OS should have been delayed another year before release to make it good, but they didn't do that. It's hard to convince IT shops to renew their expensive MVL OS-upgrade contracts if it's been 5 years since the last OS release.