Yep, the ethanol in the gas can cause some real problems. For one, it can attack the fuel lines and seals in some engines. For another, the ethanol combines readily with water - so well that it can pull moisture out of the air. This is just one of the reasons that ethanol fuel blends don't have the shelf life that gas from "the good old days" does. The ethanol-water mix is heavier than gas, so it settles to the bottom of the tank. That mix is corrosive, so will attack various metals.
The ethanol is also where an ethanol-gas blend gets some of its octane rating from. So when the ethanol settles out, the gas you have left is significantly lower octane than what you started with. This can also cause damage to some engines.
I'm a pilot, and have access to 100LL aviation fuel, but I don't run it in my small gas engines. The tetra-ethyl lead in that mix is some nasty stuff. Also, even though the "LL" in 100LL avgas stands for "Low Lead", it still has 3 times or more lead than the old leaded auto gas had. This can cause lead-fouling problems in some engines.
I've found some local gas stations which carry non-ethanol automotive fuels. I make a point of buying from them whenever I can, and always fill my 5 gallon cans from these stations for use in my generator, mower, and chainsaws. Some marinas in my area also carry non-ethanol gas (it seems the ethanol blends were attacking some of the fiberglass fuel tanks built into some of the powerboats, creating a goo-ey mess in the tanks and fuel systems). Lastly, some smaller airports carry non-ethanol auto gas. Some aircraft can burn auto gas, and ethanol is a DEFINITE no-no in most aircraft.