I think that episodic content may become the single-player business model of the future, much like WoW is the multi-player business model of right now. I'd actually prefer it if developers released episodic content in arcs if the whole thing is going to be serialized.
Say for example you have a nine episode story you want to tell via episodes. Then break that up into three three-episode arcs and release the first three episodes one month apart from each other. Then start releasing the next three about three months later, then the final set three months after that. But that's me.
Yeah, there are definitely some huge issues here. Timeliness is of course a big one, as you mention. IIRC the Sin episodes are projected to be 6-9 months apart and that's just too long IMO. Monthly should be the minimum goal, even if you need to work longer to get ahead.
I'm not really opposed to it but I think it will ultimately end up being a stealth way of implementing a $100 price point for games. After four episodes at $19.99 you're probably at about the same level of content of some straight up single player games, only now you've shelled out $80. Of course the advantage is that it puts the onus on the devs to ensure that the quality remains high throughout since gamers will jump ship as soon as they don't see the value in continuing.