There are a couple of points in this article which are either inaccurate, incomplete, or out of date. Hopefully I can clear them up a little.
Inaccuracies about Pathauto
Pathauto is not the cause of performance issues - the source of the problem is in the path module which is easily seen if you look at the project and component in the issue to fix that performance problem. While Pathauto isn't the source of the problem, it does a good job of highlighting it. Urlify, if it existed when 4.6 was popular, or an aggressive user who entered aliases for every node would cause the same performance problem.
The problem of Pathauto creating long aliases is completely up to the user. The admin specifies on the admin/settings/pathauto page just how long the URL should be. For Drupal5 I have changed the max length to 100 and there is a proposed text to alert users to the problems of using 128 as the max length. If people agree that text explains the problem then I will commit it.
As of Drupal5 Pathauto now includes the ability to ignore insignificant words as it creates the URL, so in this regard they are now feature equivalent.
How Pathauto is better than Urlify
One feature that pathauto has which is missing from URLify is the ability to bulk update aliases. If you have created a large number of aliases and then decide to change the pattern, pathauto can regenerate all of them. With URLify you would have to go back and edit them all by hand.
Additionally, there is no way to use urlify to alias users or taxonomy (as far as I know).
Pathauto vs. Urlify - different tools for different situations
I agree that they are both useful modules and appropriate for different situations. In my mind, pathauto is best for a couple of situations. The most obvious is a site where you don't want to give ordinary users the ability to create paths. Any site with a non-trivial number of users falls into that category. If you have a site that is completely run by a small group of savvy people then URLify is a great option.
Additionally there is room for the modules to work together. Pathauto can alias your taxonomy and user paths - something urlify doesn't attempt to do. So, another reasonable use is to set the pathauto pattern for nodes blank (i.e. pathauto won't create aliases) and have pathauto take care of User/Taxonomy aliases - then let URLify help you create good titles for your nodes.
As is often the case with complex questions - the answer to which module to use is "it depends".