Basic ray tracing has a major problem related to ambient light. Most illumination models treat ambient light as a constant factor pervading the ether. While ray tracing is great for computing reflections, it suffers from numerical instability and complicated surface intersection tests. Ray tracing may not play nicely with hardware accelerated rendering since recursion plays a major roll in determining the illumination for any particular pixel. Basic ray tracing is computationally very expensive.
Radiosity handles ambient light better in that it treats all objects in the environment as light sources, producing a lighting model that is in some way more realistic than ray tracing. With a radiosity solution there are a fixed number of polygons in a scene, and the computation is amenable to hardware acceleration.
Ultimately ray trancing is not best way to render a scene, but it is a component of a good rendering strategy. The high cost computational cost and poor ambient lighting are major strikes against ray tracing. As a research topic work is ongoing, but seems to be focussed on hardware acceleration.