The issue is that our busses are not cleaned properly AND are old/run down.
Ideally, you should be looking at both, if our plan is to make them attractive to people who will be choosing between them and a car. Especially in a city (and a country, overall) with the mindset we have, as a people.
I, for once, sometimes consider making use of our parking stall in the DT and driving to the office, just to avoid smelly, dirty busses. And everyone here know how much of a transit buff I am... now imagine people who already don't like transit having the same kind of internal debate. Level of service is not enough to change our culture and move people to busses.
Transit-converts will come for shiny, pretty things, like trains and fancy busses, more than anything. They need to feel like they're not going through as much "downgrade" when leaving their cars at home, especially considering that, in a city like Edmonton, using transit will already have a few visible downsides such as waiting for transit in poor weather, longer commute times, etc... Even if we were able to have bus headways as short as 2 minutes in some parts of town (which is absolutely insane), cars will still be faster and more comfortable, for the most part, so most people need to get the nice amenities and some "wow factor" to make the change.
Don't overlook the importance of look and feel, for things like this. If we actually stop to think, this is probably one of the biggest problems with our downtown, for example. It doesn't look or feel safe, clean and inviting, even though it is not significantly more dangerous than Calgary's for example.