Disclosure - I live in a kibbutz, which is a sort of social community.
Socialism is a good theory that goes against the very basic characteristic of the human nature. there's a saying here that goes something like: "If you are not pro-socialism as teenager you are a douche, if you remain pro-socialism as a grown up, you are a fool." my kibbutz is in the process of shifting toward a much more capitalistic economy and thats the only reason i still live in it.
The very basic concept of effort-reward is embedded so strongly in us, that without another ideology behind it, socialism to its fullest just doesn't work in the long run. when a group has a goal which is greater than its individuals, than yeah, socialism can work, and it can work very well even if some members of the groups live in values different to the rest. but when the actual driving force is gone, if by achieving its goal or because of a new generation of people who didn't share the ideology to begin with, it start to crumble. and i don't think equality is a very strong ideology for the long run (not to mix with important or worthy, i just don't think its an ideology that can keep over a span of generations).
As jelle said, the system is ever as a good as the people, and even in a strictly social system, indifferences do appear. one guy decide he can skip work more often, knowing he will still get what his hard working neighbor gets, another one cheats the system to get some more etc..
On average, the life standards quality in my community is higher than the israeli average, but, the stronger people, the management and highly educated layer, could live in a higher standard than the kibbutz ensure. when we see what we can get if we leave the place, it becomes clear that who ever stays in the system, are the ones benefitting from it, ie, the weak ones, and because of this, the average living standards gradually decline because the strong leave. i live in a very crappy apartment while i maintain a high managing position that can allow me to live in a much better place, while a "friend" of mine live in a much better apartment, barely work at the minimum standards and the only reason this happens, is that he got more kids and the place give preference for people with kids. (we don't own nor rent our apartments)
When a system is completely concerned with attending and preferring the needs of the people, it encourage needy people.
In my kibbutz, this is all goning change within a year and we will start getting salary based on our work time / position, while maintaining some things socially like education and health. in this system, i will be able to afford a better apartment (hell, i can even right now buy an apartment outside the kibbutz, much better than what i got), while still ensuring a good education to my kids (my kibbutz high school is rated the best among israel high school, our psychometri average, a sort of test before high education degrees, is the highest in israel. so even if will not be 100% fulfilling my living standards potential, the side benefits from living in an equal, nursuring and protective community are worth it.
So i am not saying complete wolf to wolf capitalism is any better, not at all, a system should be somewhere in the middle. allow for growth to people who can, and have a basic safety net for those who cant. it can't automatically presume that people needs should be regarded higher than people abilities, but it cant neglect the needs either.