I was working in Quito for three months earlier this year. The US Embassy says its dangerous because its, well, dangerous. But it's also amazingly beautiful. So, I guess you can take the good and the bad.
I never had problems, but a lot of people I spoke with there did run into problems. A friend of mine had been kidnapped, and, along with his debt card, given a tour of the city. He was just picked up in a bar by a fake police officer and accused of having drugs. He escaped unharmed, but I was told of a case of an American citizen who was tortured (fire and testicles -- ouch.) because the kidnappers didn't believe him when he said that he didn't know have the PIN for the card.
It's not like many parts of Buenos Aires where it's safe to walk out at night. Even in the nicest neighborhoods, walking out past 9:00 is a no-no. Taxis are dirt cheap (think $4 USD from Callao/Rivadavia to Juan B Justo/Santa Fe), but you always have to call the them. In Buenos Aires, they'll send you a taxi regardless; in Quito, if they don't have one in the area, you'll have to call back later.
La inseguridad is a huge problem. They have programs on TV whereby people call in, report a crime, and demand justice. One newspaper has a daily section for people to talk about how they were victims of crime.
The downtown area of Quito where all of the bars are is guarded by military police at night. After 3 a.m., the area becomes tierra de nadie, and it's downright creepy if you ask me.
I was so happy to leave to be completely honest. There are a lot of beautiful sights, but I think they're all outside of Quito. I only did a few trips, so I can't speak on behalf of others parts of the country.