I don't know if I'd say that... Indeed, one of the main reasons that biologists still place them into different species is due to the fact that neither one of them can survive in the other's environment for very long. If you raise a polar bear in a brown bear's habitat, it'll still have white, insulating fur, and (relatively) smaller, sharper carnivorous teeth. While they do and can interbreed, this is hardly a common event. And when you look at the morphological and dietary differences (as Mage said), there are some pretty severe distinctions between the two groups.
The zone between both habitats are habitable by both, and who's to say polar bears wouldn't eat berries if they could? Dietary differences are obviously more due to the different environment. The fur isn't much of a big deal either, think of the stoat for example. Polar bears are just at a more permanent stage. And please, what morphological differences do you mean? Anyway, as Mage said, I think they're better called a subspecies than a different species.
That's really the problem with the reproduction-isolation definition of speciation.
It's not the only species definition. There are morphological definitions, reproductive definitions, phylogenetic definitions, and in the end the best is a blend of them all. Depends what is available, leading to the enxt point:
But even more than that, there is another huge problem with this definition: what about fossils?
For fossils of course, until now mostly morphological information was taken; usually teeth morphology in mammals. We're starting to get DNA material from recent fossils, and for the old ones, there are still other methods like bone histology (yes, bone microstructure is often preserved even though the original materials have been exchanged by minerals).
But another point in fossils is, usually the fossils we find are so distinctly different from others, due to the fragmentary report, that defining species isn't as hard as in recent fossils like for hominids, where we have a huge mash of fossils and no clear idea of where to put boundaries.
What about bacteria, some of which can directly incorporate the DNA from similar organisms (though not necesarily from the same species) right into their own code? This throws a serious monkey wrench into the problem, as they can hybridize without reproducing. Which is really cool, but also makes things rather complicated.
Don't they just exchange plasmids during bacterial sex? Nuclear information is spread solely through asexual reproduction, i.e. splitting. It does influence evolution, but is not much of a species issue. I think.
Thinking about it I wonder if ultimately some form of gradient might be necessary, rather than a set definition.
That's exactly the problem they have in paleoanthropology. Everyone that finds a new fossil makes a new species out of it, and in the end we have a heap of species and no clear order. A gradient would be the more sensible thing in that aspect, as biologically speciation is indeed a gradual event, but tell that to those fame-hunting professors -.-
To answer your previous question on gradualism vs punctualism, you'll have noted from above I'm rather for gradualism, though I don't exclude punctualism. I think every taxa have a sort of base evolutionary adaptive rate, depending on the metabolism, environment etc. etc., with a more or less high potential to accomodate to fast changes. So in events when the environment changes quickly, those with a high potential rate may adapt fast, making it look seemingly saltatory in the fossil record. What I completely reject is pure saltatorism. Organisms change constantly, even though the changes can be infinitesimal; example: coelacanths. They look almost exactly like their fossil ancestors, and yet they're different species; the fossil species are extinct, the modern ones just look like them.