Unfortunately, not everything is good in Madeira, but where in the world could you say that about a place/country?
Here's what I consider to be the downsides:
Getting on and off the island! The airport is often affected by adverse weather conditions and this leads to cancelled flights or very lengthy delays. At such times, the airport is complete bedlam. The cancellation of flights seems to be happening a lot more regularly than I have known it over the past years with flights affected over the summer as well as the winter months.
As there is no other means of leaving the island (other than to travel to Porto Santo on the ferry), you can feel stuck on the island. There is hope that a ferry service will be introduced in 2018, but this has been promised before and never materialised. If a ferry were to be introduced, this would mean access to the mainland of Portugal would be possible.
Secondly, it can be difficult to buy everything on the island and choice can be limited and expensive. The choice in supermarkets has greatly improved over the years and more large shops are opening selling household items, sports goods etc, but it still has a long way to go to cater for all needs. However, Amazon, IKEA and many UK high street stores do deliver to the island and so if you cant find what you want on the island you can order this way.
Employment is virtually non-existent, and what jobs are available will usually be on a 3 month contract basis. People under the age of 30 years are usually given any vacancies that do occur. Wages are also very poor and if you are going to be paying a rent/mortgage and adding your cost of living each month on top, then you will struggle to make ends meet.
The houses can get damp - this is true of all properties, regardless of whether you are in Funchal or up in the mountains/countryside. Obviously the higher you go, the damper the climate, but if anyone says there is no chance of a damp house in Funchal, then they are not telling the truth! This problem is easily rectified by installing some heating or just putting an electric heater on for a hour or so in the evening (Winter) if in Funchal area, but you will need something to take the edge off!
Other than the points above, Madeira really is wonderful a great place to live - providing you are not expecting to find work or will have a mortgage/rent to pay each month.