Well, in my opinion all grain is much better, however I will now explain this opinion.
I brewed with kits (never sugar though, always malt) for probably 18 months and I made some pretty alright beer. It tasted good to both me and the people that tried my brews and I got heaps of great comments, but it did always taste a bit like a homebrew and never really as clean and crisp as I wanted, the odd funky flavour in there. It had a certain metallic kind of tang to it too. I got on to using specialty grains, mostly crystal and saw some mild improvement (I used to use far too much crystal in most of my early brews). No liquid yeasts at this time, only ever the coopers/morgans or Safale S04 dry yeasts.
I then met another bloke in my region that had been doing all grain brews for a couple of years, so plenty of experience, and had a try of some of his lagers, stouts and ales and I was blown away when they were compared to mine. He also introduced me to a group of other all grain brewers who are now all good mates of mine and we kind of all function like a club to split bags of malt and hops etc. That was the point where I immediatelty went to all grain. I guess if I had to describe all grain beers it would be the most wonderful malt taste and a sort of freshness that that comes through in these beers. Plus the ability to tweak recipes a bit more to your liking. I have tasted all grain beers that demolish commercial examples, but I'm yet to taste any really good extract beers, BUT I really only know fairly experienced all grain brewers and very very few extract brewers so I haven't had the opportunity to try any really good extract brews.
Now, at the same point as I went to all grain I also switched to using liquid yeasts and I have only done one kit with liquid yeasts prior to this, and it was pretty good bar the use of too much crystal with was an error in the recipe I used and not a kit issue. I'd be keen to actually go back to doing a couple of kits with liquid yeasts to see what comes out.
So I think in my opinion, yeast makes a huge difference to your beers and I think perhaps if I was to go back and start brewing kit beers with liquid yeasts I might see a huge improvement in what I was initially blaming on the kits themselves. I think I also blame all these homebrew flavours on the dried yeasts that come with the kits, I really do think they are quite inferior to what you can get out of a well cultured liquid yeast.
So I guess that's my thoughts. I'm going to do a couple of these new cascade kits because I can get them for free and try them with some liquid yeasts and see what comes out. I mean people win homebrew competitions with extract beers against all grains, but you will note they use liquid yeasts. Try and meet up with some all grain brewers so you can have a taste, maybe even go halves in a batch with someone and then you can form your own opinions. Worst case scenario you might make some brewing mates.
That's my story.
Cheers, Justin