I am developing a core data application and was thinking of adding iCloud support, but after looking around on the web I frequently heard that iCloud+CoreData is unreliable and will often break.
Is this true? A book I am reading on the subject of core data mentions that iCloud+CoreData was unreliable in iOS 5 but has since been fixed, however I have also heard the opposite, that iCloud+CoreData is still unreliable in iOS 6. If so would storing the database in a custom format help at all?
Now that iOS 7 has been released, we can talk about it. And everything would seem to indicate that in iOS 7 iCloud Core Data sync has been fixed. I'm about to add iCloud Core Data sync to an (iOS 7 only) app I'm building, so I can't yet speak from personal experience, but everything I've heard suggests that it's now good for prime time.
I highly recommend watching the "What's New in Core Data and iCloud" session video from WWDC 2013: https://developer.apple.com/videos/wwdc/2013/?id=207 (requires an Apple Developer Program membership). I've watched it twice now, and they've certainly made things a lot more straightforward.
Lastly, I recommend taking a look at UbiquityStoreManager on GitHub. It's a library that pretty much does all the painful parts of iCloud Core Data for you. It's been modified to take into account the significant improvements in iOS 7, all though if you want to take advantage of them your app has to be iOS 7 only (that applies whether you use the library or not).
UPDATE: Since posting this answer, I now can speak from personal experience, and can confirm that Core Data iCloud Sync in iOS 7 is rock solid, and what's more, unbelievably easy to implement. I added it to my app without using UbiquityStoreManager or any other 3rd party library and it was very straightforward. Literally just a few lines of code.
EDIT: I created a GitHub repo with my iCloud Core Data stack for iOS 7. Hope it helps: https://github.com/mluisbrown/iCloudCoreDataStack