I will dig up the specifics of some things that I've heard before, but I know that the whole "Michigan rep" thing is BS. It is true that if you pick random people off the street on either coast, they'll be less likely to realize what a strong program Michigan has. The people who need to know, however, definitely do.
Ironically, I experience the same thing as a Michigander who went to Penn. Many people around here don't know the school exists, or assume I really meant to say Penn State. I did not have to worry about the people who need to know what Penn is all about (med school admissions) not knowing. You'll find the same thing with med school. The average joe on the street out west or back east might not know that, in the immortal words of Ron Burgundy, you're "kind of a big deal" but residency directors definitely will!
I've never heard anything about grade deflation. I do know that we get our asses kicked 3rd year. But I also know that part of the process helps to make us very prepared for residency. I know it will be hard, but I'm really looking forward to getting past the basic sciences and onto the wards.
Since you asked, I'll give you one thing that I don't like: I wish they'd move the closing time for M1 tests and quizzes up from 8am on Monday to Midnight Sunday night. That extra 8 hours really just equates to about 7 hours of additional procrastination/distraction for me throughout the week.
Really, they pretty much bend over backwards to accommodate student wishes. For example, we've recently worked with administration and faculty to revamp the quiz/exam policies. Quiz results are posted for longer periods of time (often through the final exam during some sequences) so that students have more access to them for review and studying. Also, after student prompting, the testing software underwent a bit of an overhaul so that we receive immediate feedback on not only right vs. wrong, but info on what the correct answers actually. It has really expanded the opportunity to use all of the tests as learning tools - something the pass/fail system is supposed to be about.
No place is perfect, and there will definitely be things about Michigan (or any other place) that each individual med student would change. All-in-all, Michigan is a pretty damn good place that people are very happy with.