The first time I heard about it was about 3 months back when I read Roger Ebert's review of the movie and how he had said after a viewing in Toronto that it would win the Audience Award. I was intrigued by the storyline and saw it as soon as I got the opportunity. I found it good and entertaining but not as great as it was being made out to be.
I have seen far better films during the year which should beat this hands down. Talking about Oscars I feel that they are a bunch of jokers. Though they honour some good performances from time to time they are not the best judge of which are the best performances of the year. Just as an example, would you believe that a movie like 'The Shawshank Redemption', which has been voted as the number one movie of all time by millions of IMDb users, didn't receive a single Oscar!
About all the criticism showing India in a bad light, it's a Goddamn movie! If you didn't like it just ignore it. If someone says that westerners don't show the dirty side of their country I will point out many movies which clearly do the same.
Another thing which amuses me is that loads of Indians, esp. the Indian media, seem to feel proud that this movie has been nominated for Oscars. I don't understand why the pride! The movie has been made by a Hollywood studio and by a Hollywood Director. This is not an Indian movie, period!