Scribus, which I had talked about before, is an open source design tool for designers. But it's not yet looking too good. The interface isn't as outdated as Audacity, but still feels like something out of the Windows 95 era. It feels much more complicated and less polished than InDesign. Open Office has the throw back look down to a science. It looks very much like an early version of Office despite having many advanced features. (Microsoft has since made the Ribbon interface part of office making it easier to find underutilized features)
Firefox and Thunderbird have a great look because they're easily skinned. That encourages the design community's help.
Although I think that too many open source programs have pretty poor UI design (from a mass market perspective), the open media center Elisa has a fairly commercial looking pretty design too. It's pretty much inspired by Apple, but taken in their own direction.
Design is a huge part of innovation. That seems to be a place where commercial products can beat open source. Despite the criticism, a lot of this is great software in a bad package.