A plug boot, as someone said above, should fit like a glove. The boot shoulf have no extra room in it, but also not hurt, pinch, or roll your foot anywhere. It should fit the shape of your foot perfectly on every surface. It should also not restrict the natural shape of your foot - so if you cannot step down and have your foot lay comfortably flat on the footbed of the boot - then you have too small of a boot. This will kill your balance... but, remember, plug boots should not be fit like that. They are laterally stiff above all else, and with no room within the boot for your foot to slide, lift, or move, they provide better control than anything else out there. Flex is just a sideshow. They come stiff with thick plastic so they can be softened and shaped to the specifications of the skier so they can obtain the fit I desribed above. If they are too stiff - simple solution - soften them.
The question is: what do YOU want out of your boots? Do you want a 100% performance machine that will likely not be warm all of the time and may (or may not) require you to buckle and un-buckle your boots on a chair lift (depending on how tight YOU PREFER to have your buckles)... Or do you want a boot that will offer decent performance out of the box without a TON of boot work, fitting, and pain through the process of making them right? Retail boots aren't bad - they just don't offer the (foot) hold and fit that a plug boot can offer a skier. A retail race boot is still a great boot if you are looking for a semi-stiff low to medium low volume fit.
Most skiers don't have the need for that level of performance, and don't ski enough to have the time to dial in that kind of fit. They also prefer to have slightly more comfort from the get-go... as well as more forgiving liners and plastics. Is this bad? No, certainly not. Are plugs useful? You bet. If you want that kind of performance nothing will come close to the fit and control they offer. Racers and very high level free skiers can benefit from them. The only problem is that often they are not set up properly for the skier that is in them - and that is the main drawback to them. They require time, effort, and the ability to deal with a little pain and a few sores on the way to the ultimate fit for stability, precision, and control.