Guys, this is all such useful advice! Get those radios as central to your home as possible, both vertically and horizontally. Keep radios at least 3 feet off the ground so their signals have a fighting chance.
@Joe.cannarella when I first read your post and you mentioned your hub was in the basement, that was the first red flag. I'm an IT consultant and run into this with consumer clients often here in Toronto. People just don't want to see the devices in their homes, so they put them in a corner of the basement, far from devices on the upper floors. Building materials, pipes, electrical wires and sometimes wire reinforcement mesh under tile floors all contribute to signal loss on the upper floors. This is a primary reason manufacturers are trying to beautify their WiFi routers (I know we're not talking 802.11 here, but we are discussing radio signals), so people will be encouraged to locate them in central or more appropriate places than, on the floor in a closet and such. Some mesh routers even help you locate devices in the best place now.
Signals will do some bouncing, but the bounced signals are significantly weaker because they are absorbed by the building materials, not perfectly reflected. When you decide where to put radio RXTX devices in your home, draw a straight line in your mind's eye from the hub or router to your destination device and consider how many floors, walls, stairs, and other obstructions are in the path of that straight line. All of these will contribute to the attenuation of the signal.
Also consider the size of the antenna that can fit in a dongle, vs integrated into a hub. Not saying that I have any specific knowledge of the difference, between the antenna located in the HUSBZB-1 vs the SmartThings hub, (my ST hub has been sold, so I couldn't compare if I wanted to) but I've read so many accounts of issues that users didn't experience pairing issues with their ST hub, but now experience with the HUSBZB-1 dongle. @Tony has done such a great job of illustrating the other factors that come into play. Many of the users complaining that they see issues they never saw before, didn't have a hub connected at the time ST was first installed, and they probably didn't have that many devices either. So there was little to nothing interfering and their mesh strength only grew over time as they added additional powered devices that could help repeat the signal.
My experience looking at WiFi dongle construction is they have very small antenna, which are usually nothing more than a bit of copper trace on the device's PCB, so I would not be surprised if you will see better results when you have power devices strategically located to repeat the signal. Worse still, you have to know which ones are good at repeating signals and which ones frankly suck at it, or simple don't repeat the signal. For Zigbee devices, Xbee has proven to be a good repeater for several owners, and it lets you view the network topology (My parts are on order). For Z-Wave, I'll refer you to the many posts here and on the ST community about how to deal with it. I have only one Z-Wave device. It's fair to say I'm not a fan of the whole inclusion/exclusion process and the specific requirements. Not that there's anything wrong with it... 
