I figure it must be a cultural problem. ATI was known for buggy graphics drivers back in The Day, if I remember correctly. I certainly remember not buying their cards for that reason. Apparently after AMD bought them, they have been unable to change the culture (or didn't care). The state of ATI drivers has always been about the same.
I don't think they invest nearly as large a percentage of their profits in software compared to Nvidia.
I don't even think that is the problem. It seems more an engineering cultural one, that has sadly infected most of the software industry at this point. Instead of incremental improvement it seems the old ATI drivers (and seemingly much of the recent history) are just rewrites rather than having a replaceable low level core and a reasonable amount of legacy that just gets forward ported to newer HW architectures. So, they release the hardware and its basically obsolete before the driver stack ever stabilizes sufficiently that any single driver can run a wide range of games well.