CA's initiative system works just fine, as reference to this summary shows: http://www.ppic.org/contents/pubs/op/OP_1100FSOP.pdf
I support it because it increases voter turnout by appealing to "issue" voters, as well as giving all eligible voters more direct participation in their government. As the chart shows, "the idea that any wacko who gets a (relatively) small number of signatures can then pump money into ads and possibly make law in California is" ill conceived. Perhaps opponents of the process fear that voters, unlike politicians who are often far removed from the actual impact of the laws they enact, do not suffer BS gladly, and are thus more prone to tell it like it is when it comes to voting on matters of public policy and how it's put unto effect. Or, perhaps it's just because opponents are as inherently untrustworthy of their fellow citizens as they are themselves.
The problem with the initiative process is when elected officials refuse to enforce initiatives they personally disagree with, even though they have the force of law. CA's Prop 187, preventing illegal aliens from receiving government benefits and Prop 8, preventing gay marriage, are the two most recent examples of CA AGs' unfaithfulness to their oaths of office in this regard. 187 was held unconstitutional by a federal trial court, but then AG Bill Lockyer refused to appeal that ruling. With 8, then AG Jerry Brown waffled when the matter came before, and was upheld by, the CA Supreme Ct. But when Prop 8 was held unconstitutional by a SF federal trial court, new AG Kamala Harris, who barely won office by the slimmest margin in CA AG-election history, outright refused to do her duty to defend or appeal it. The appellate ruling, that Prop 8's proponents lacked legal standing, as upheld by the US Supreme Ct., effective knifed the initiative process in the back and subjected it to the personal whim of the AG, her oath of office notwithstanding. Look for that dimension of the ruling to be "revisited," as SCOTUS likes to say when it's confronted with a monster of its own making and realizes the damage done and depending.