Please elaborate. Is it the 4WD system or something else? Looking to get educated, not argue.
The 4WD system is just fine, especially in the Limited. The lockable, limited-slip Torsen center diff in the Limited (and all trims of the 4th gen) is top-shelf. The part-time in the other trims of the 5th gen is cheaper and, IMO, less desirable.
The issues that I have with the 5th gen drivetrain are 1) the engine and 2) the transmission. When you combine the two, it just doesn't have the sophistication that I think the price point deserves. The engine note is coarse and you have to wind the engine up to get enough power to move the truck. It needs more than 5 speeds. Six speeds is the standard these days, with many already at 7 and moving upwards. If you haven't driven a vehicle with these new transmissions, I suggest that you try it. You might be pleasantly surprised.
Go drive a 4th gen V8. It has so much low RPM torque that you can accelerate quickly without ever turning much revs, and as a result it is quick and quiet. While the 5th gen V6 is nearly as quick, you've got to rev it hard to get the same acceleration and the engine note is just nasty. You have to kick the 5th gen to get it to downshift and up the revs and it is just unpleasant in comparison. In the 4th gen it just scoots with no drama.
Look at it another way. When was the last time that Toyota upgraded that transmission? It dates back to the 4th gen. When was the last time that Toyota updated that V6? Again, dates back to the 4th gen. As a result, there are fullsize pickup trucks that get better fuel economy than the 4Runner.
No, I'm not a "it has to have a V8" guy. I drove the ML350 (admittedly a more expensive vehicle and one that does not have Toyota reliablity). It has a V6 smaller than the 4Runner and a 7-speed transmission. It weighs about the same, but is quite a bit faster and much more responsive all the while achieving better fuel economy. The engine note is very pleasing. Though you do have to rev it a bit, the transmission responds instantly and the engine never sounds coarse. It moves.
There are many ways to get decent performance these days. Ford has gone the small-displacement plus turbo route. Chrysler is going diesel and 8-speed transmission. GM is doing variable displacement plus diesel. It takes engineering and that costs money. Toyota needs to invest.
Please elaborate.

I read about some frame rust issues. Is this a recall for early 4Runners? Did Toyota do so willingly or did it take some legal action. If Toyota stepped up and did the right thing I will be encouraging them with my wallet going forward.
No, there is no recall or TSB. Toyota appears to be handling it on a case-by-case basis. See this thread:
http://www.toyota-4runner.org/4th-gen-t4rs/180929-frame-rust.html
I'm not trying to slam Toyota or insult people who own and like their 5th gens. I'm just pointing out that they aren't perfect. I think Toyota has under-invested in the 4Runner. I'd like to see them make it better. They could make it perform better and get better mileage while still being capable offroad.