Hi Fluffy
1 - It's a development board, so you could use it to prototype an industrial device, but you might want to replace it with something more physically and electrically robust in a final installation.
2 - The Arduino's outputs won't drive very much. You'll need external components to draw more power; transistors, Darlingtons, possibly H-bridges or dedicated motor driver chips. This is going to be true of pretty much any microcontroller system, so, with a bit of careful planning, you should be able to use your motor drivers with a bigger microcontroller in future if you want to do something really complicated. With the right motor driver circuits, the sky is pretty much the limit, although it is much easier and safer to stick to low voltage DC motors if at all possible.
3 - From a basic Duemilanove you should be able to control several motors, although the exact number depends on what sort and what your requirements are in terms of speed control and position feedback. You could use two - one for motor control, the other for sensor input, commanding the other over a serial port - but you might be better off with a bigger microcontroller like an Arduino Mega if your requirements are particularly complex.
4 - The big strength of the Arduino is that it's really easy to get started and develop prototypes. Most systems that can do more require quite a bit more work to get there. It's difficult to say if there's a "better" system without more information on a specific application.