Ed,
The aircraft is not inherently unstable (ala Typhoon), it is longitudinally stable but at some parts of the envelope that stability is somewhat relaxed which leads to the prblems identified. The aircraft will not fall out of the sky and is still controllable. It is the amount of capacity the pilot has to use to maintain for instance height and or speed that leaves limited capacity to carry out other routine cockpit tasks.
As engines has stated, the SAS is far more than an autopilot. It has varialbe gains for different parts of the envelope and compensaion terms for flaps power airbrake etc. It has been a great success considering the time frame involved.
Engines,
The reduced stability was hinted at in the initial aero work but the magnitude of the effect was not fully realised until flight testing took place. Unfortunately, the envelope was only slowly expanded (as with all test programmes) which resulted in the full extent of the reduced stability only becoming apparent as the programme continued.
Jimmy,
As nan as mentioned, Warton is the home for flying and Woodford the home for production. Far from ideal....