AVG isn't doing well with the false positives these days. Just a few short days after crippling non-english versions of Windows XP with a botched update, the company now has another problem. The latest update of their suite is now flagging the nearly ubiquitous Adobe Flash as a malicious trojan.
The suite of course gives people the choice about whether or not to remove Flash, and at least in this most recent instance it is not a mission-critical file that disables the system that has been misidentified. Still, false positives are something that not only prevent people from trusting their A/V suite, but hinder people's ability to properly react to a problem when a real one exists.
AVG recently identified a software firewall suite, ZoneAlarm, as malicious as well, putting some serious doubts into the company's QA. The company has made a public statement that they are implementing systems to prevent these false positives from continuing to pop up.