I consider Aikido to be very effective in a fight. Take for example multiple attack situations. Most (if not all) real-life encounters include more than one opponent, and Aikido is always practiced with this possibility in mind. For instance, this is one reason why we practice two versions of the same technique (irimi and ura). We also carry in mind the possibility of facing armed attackers, coming from all directions.
On the subject of Aikido's lack of ground fighting, in the case where an Aikidoka is taken to the ground, some knowledge of grappling is handy. But grappling alone makes the aikidoka "loose the big picture" like one forum member said. Grappling rules out multiple attackers (forgive my ignorance, but I haven't yet seen somebody grappling/wrestling against two people, especially in one of those "real" UFC fights). It is better for aikidoka (as naive and idealistic as it may sound) to use their Aikido skills and simply not let themselves be taken to the ground.
Which brings us to the confidence problem in Aikido…
Boxers trust their punching, grapplers trust their ground training, TKD people trust their kicking. But so many Aikido practitioners (I notice as I read through the forums) are not confident about their training that it saddens me. Imagine somebody who trains in Aikido for many years, learning how to break people's balance at the touch (kuzushi), deliver grounded strategic strikes (atemi), develop a strong center (hara), move the body with ease (tai-sabaki), the dynamics of hand movement (te-sabaki), sense and connect with energy flow (ki musubi), use breath power (kokyu), use timing and space (ma-ai), and develop acute awareness (zanshin). If you supposedly developed these skills, then what is one to be insecure about when faced with the possibility of combat? Exactly how is it that these abilities are not combat-effective?
These skills I mentioned above are the basics of Aikido, not ikkyo, nikkyo, sankkyo, etc. These are the skills of the aikidoka, not the ability to catch a fast punch and twist the wrist, definitely not an encyclopedia of empty waza. Of course, if you didn't concentrate on developing any of that and just went through the mechanics of technique year after year, then it is your training approach that is wrong, not the art itself. I practiced with the wrong attitude for many years, but instead of blaming the art or my teacher, I tracked the problem to my own mindset and changed my training approach. Even the Aikido of master teachers evolves constantly.
I also want to say that a man like O'Sensei could not have founded a deficient Budo system. He and his uchideshi went through great pains and efforts to establish Aikido as a martial art, but somehow some people still feel skeptic about Aikido's martial art nature and some others think we need to provide proof of its combat effectiveness. There is no need to prove anything, at least in the terms that many other disciplines are put to the test. We have no need for tournaments, cross-martial arts matches, or participate in any of those UFC (in which case, any self-respecting aikidoka would not take part of such entertainment--oriented event). We should train with higher purposes in mind, and in doing so we will grow confident enough to eliminate the anxiety that confuses our minds.