It's just my opinion and I don't have any numbers to prove my point, but I think retention numbers are pretty good.
I guess quite a lot of people quit the game after playing for only a few hours/days, but you can't avoid that really. It happens with any MMO and any game in general (especially if it's f2p).
But people who play for one month or two usually tend to stay abord for quite long. For what's it worth, from my experience most of these people play for at least a year. You can't really make them stay more, after that time I guess it's either they become fanboys and will have a strong interest in the game for the rest of its lifespan, or they go away and never return, because they do not feel the game has anything special.
I think this is quite different for newer MMOs, those have a hard time retaining people for more than a couple of months. Again, this is purely my opinion based on people I know.
Where AO fails indeed is at attracting players.