Are daggers viable for direct combat, specifically when dual wielding? And are there any bugs or issues with them that I should be aware of, I have heard various reports of issues with perks but want clarification.

They're the weakest melee weapons if you're not sneaking, and they have the shortest reach.
The Armsman perk affects daggers (as does every other one-handed perk except the axe/mace/sword perks), the Fortify One-Handed weapon enchant does not.

I guess it's viable but annoying to fight with daggers.

I sort of figured, good to know the fortify skill won't work. I doubt I will use them, mostly just looking at my options for a new character. Thanks

Actually, one other thing that should be mentioned is that your character can swing daggers the fastest of all the one-handed weapons. So although they're the least powerful one-handed weapon, they can make up for that a bit with their speed.

For future reference, the speediness chart of one-handed weapons looks like this:
Daggers > Swords > Axes > Maces

I use them for quietly sneaking up on someone and slitting their throat. You can have fun with dual wielding daggers against certain foes, but remember you can't block with dual wield. Theres some cool combat animations when you attack with both weapons at the same time. Also if your two daggers are identical, there is a bug equipping them from the favorites, you often times have to go into your inventory and equip them. Twin daggers would be good for the assassin character who can switch from bow to his daggers and maybe have some magic spells to add to his lethality.

I have no problems with them, but I smith my light armor to the cap and use Legendary Ebony Daggers. They use almost no Stamina for power attacks.

My Fork and Knife weapons beg to differ!

Yep - my character uses them when he runs out of magicka. They're not overly effective, but they can work.

If you do use daggers, your best bet would be Ebony daggers. For even greater damage, enchant them. There are also some special ones like Dagons Razor ect.

If you having the right perks in Alchemy, Destruction and Echantment, you can obtain fairly respectable DPS with a pair of double element enchanted daggers. Values of up to 70ish damage per element can be achieved if I remember correctly.

Now the DPS is far inferior to dual swords with 4x Fortify One-handed. But then, so is everything else really.

So if you are interested in RPGing the hell out of a magic/wizard theif wielding magical daggers, it is perfectly viable. You will not have issues with dragons and such.