I live in UAE, I guess, I should add my $0.02.
1. In Dubai, I practice Islam fine, I've been to many places around the world both muslim and non-muslim, and I found UAE to be the best place for me to live. There are night clubs and booze in hotels, muslims are not allowed to drink alcohol, bars don't enforce this policy strictly but it is not like non-muslim and some muslim countries - drunken people are not allowed on streets or they face strict penalties. Dubai, Ajman, and Um ul qwain have lenient policies on drinking, but rest of the states are strict about it. Dubai is still better than other two, because in Ajman people seem to drink on streets and muslims are allowed to drink unlike Dubai. UAE is not perfect but I found it better than other places overall. Westernization and drinking problem is much worse in other muslim countries as already mentioned Egypt, Lebanon, Morocco, Tunisia, but I wonder why nobody brings them in discussions. UAE and Saudia seems to get bad press from both muslims and non-muslims in different occasions, yet both are better than many countries in the world (muslim and non-muslim). Perhaps because people are in us vs them thinking and respond with knee jerk reactions.
2. There are labour issues here, but nobody talks about the changes govt. has made in last 2 years. They have improved labour laws, prosecuted companies who were not treating their labours well, set up an hot-line specifically for labour complains, and building modern labour complexes
http://www.estatesdubai.com/2007/10/construction-work-commences-on-abu.html Not to mention, I've seen Mexicans treated much worse in USA, but nobody brings that even in news. I guess they don't deserve better living *sarcasm* There is nothing wrong with constructive criticism, but I doubt it these discussions are about constructive criticism.
3. I've not seen any discrimination of shias, sufies, or bahais. I've been to Iran and discrimination of sunnis and bahis was very bad there. I even heard of hate crimes against them, sunni and bahai Imams and preacher sometimes disappear in Iran and police seems reluctant on investigations. Some people said police is involved in the disappearance similar to cases in Iraq (disclaimer: I'm not saying this true that police is doing this, it maybe nothing more than hearsay). Nothing this sort happens here, and people of different faiths and sects are living happy and prosper lives.
UAE is not perfect, but no place is if you think about it, but it is in the right direction and progressing very fast. It is doing pretty good for approx. 30 year old country.