I use the RAW system and it's great (using it without the updates is not RAW, by the way).
Every player in the scene must participate, and I go around the table. Players often get to choose the goals, and have a lot of leeway in shaping the course of the SC. Sometimes it's more structured, but I'm influenced a lot by games such as Spirit of the Century and Houses of the Blooded. Although I haven't yet gone with a full house rule of letting the players narrate their own results based on a roll (using wagers from HotB), I'm considering that.
Also, since the players can be creative in what abilities they are going to use, it allows for a lot of creativity outide of roleplaying the actions themselves.
It's also important to set stakes for the SC that is exciting. Dead ends for failures are not good, but making it so failing creates more conflict and complication. Crossing a desert in 4 days instead of 5 is boring. If there's nothing exciting about the goal or failure for the players, then it shouldn't be a SC, in fact it should be glossed over as quickly as possible.
But I'm also with Saagael. Players have the power to basically invent their own skill challenges, too. Especially if we are in a scene that turns from something simple into something with some meaty conflict potential.
The biggest issue is the system dis-incentivises participation for non skill-focused characters. The fact that you can fail the challenge makes it so that players will not want to participate.
Does the fact that you can lose a combat make it so players don't want to participate? I don't think so. The possiblity of losing is what makes it exciting.
Players don't have a choice. If they are in the scene, they are participating in the SC. No one gets to sit out any more than they get to sit out of a combat. You go around the table, or whatever order works, and everyone must contribute. I suppose you could allow them to delay, but that only postpones things.
The updates makes the targets low enough that even unskilled characters have a decent chance to succeeed, and success is fun. Nearly every SC I've run, the players get two failures before succeeding. It's perfectly tense, but not so common that the players who might lack in a skill for the SC are being a real detriment. There's also a lot of room to get creative using aid a friend skills.
Failures are great complication additions. You can use them for a variety of things. In one clue searching SC, failures gave them false information (all the information was given at the end, so it wasn't clear what was linked to successes and what wasn't). In a chase to get away from a dragon, failures had NPCs with them get eaten (they had taken a couple of prisoners, so it wasn't a big deal, but BOY did it add to the tension of the chase).
Stalker's System puts the DCs way too high, it requires that players be skill monkeys to have a decent chance to succeed on a per person basis, coupled with the limits on what skills can be used, this makes that desire not to participate stronger - being forced to do something you don't want to do sucks. Sure, he balances that with partial victories, but that doesn't make it more fun for those players, just less sucky for the whole group when it's over. Also, physical skills get boned since they only can be used in one type of challenge. Outside of that, it would be a great alternative. There are some other good ideas there but very little of it you can't do by tweaking the RAW, if not by default. For example, his advice on not necessarily having SC generate more combat is a good thing to keep in mind.