Backspace in sh and bash
I have indeed (and since a very long time ago) had backspace working in Bourne Shell (sh) - you may want to look at the command stty in order to set the erase character to be the same as the character generated by your backspace key. It is common to find that the backspace key sends "control ?" and changing this to "control h" often arranges the difficulty. The change can be done in your .profile file, for example.
I agree with you though - bash is a very good thing. Must be why they call it Bourne Again Shell. I've been trying zsh this last little while - but I'm not sure that I'm getting the best out of it yet. I'm looking for a good book on this one. If you know of one please inform.