I am probably about as big a proponent of Zytel as you will find on the forums.
We use Zytel at work to make internal machine components which take heavy loads very often. I have yet to see the Zytel fail, the metal (primarily aluminum) components go first. It is extremely strong for its weight, and I find it ideal for folder handles.
Zytel is a combination of Nylon plastic and glass fiber reinforcement. It is used on cheaper knives simply because it can be injection molded to shape, rather than machined like G-10 or Micarta. This greatly reduces costs.
In my experience with industrial applications of these materials, Zytel is (by weight) far, far stronger than G-10; and (by volume) significantly stronger than G-10. Phenolic Laminate (aka Micarta) is better than G-10 but still not as strong as Zytel. Also, Zytel bends wheras these other materials tend to shatter under impact.
If the surface texture is considered too smooth, I would recommend using a bit of 600 grit sand paper to lightly scuff up the surface. This exposes more of the glass fibers and greatly increases friction. However, it will change the appearance of the material.
Blade Santa Cruz does have a point about humid environments. Nylon-based products will absorb and hold water; and doing so slightly reduces the strength. I have never had a problem with this, as the rate of absorption is very slow.
Also, nothing is truly "unbreakable". All materials will deform or break at a high enough stress level. From what I have seen, the breaking point of a well-designed Zytel product should be beyond the capabilities of almost anybody.
The only thing I don't like about Zytel is that if it is used on an unlined knife sometimes it feels "hollow", which of course it is. This isn't a problem so much as personal preferance.