The problem with the 'collapse' point of view is that it's easy to say "and thus only the observation we saw actually exists". But that's an extra postulate beyond asserting the wavefunction describes all of reality. By just saying the wavefunction describes all of reality, you wind up with Many-worlds:
http://en.wikipedia.org/wiki/Many-worlds_interpretation So the coins/paper analogies do make sense, except that there's not a single outcome: there are two possible outcomes, both realized, but each version of you interacting ("observing" is a loaded term) with the system to the point of decoherence (
http://en.wikipedia.org/wiki/Quantum_decoherence) only ever get to see one of the worlds, which is the one you find yourself in. This isn't that mysterious given that your brain and everything else in your body are made of the same fundamental particles as everything else.
You highlighted a problem with quantum computers and other things: how to make sure a system is in a quantum state without directly measuring it. It's hard to fight decoherence.