I have some old plates kicking around my garage dated 1959 and they are still easy to read and aren't peeling or cracking. It is pretty clear they don't make them like they used to!
Service Ontario won't confirm whether there is a problem with a bad batch of plates, or why it's happening according to a recent article in the Record newspaper. A quick scan of any parking lot will tell the story though. There seem to be a lot of faded and cracked/peeling plates out there. Drivers who pay for these plates are understandably perturbed.
If you have peeling or cracking plates that are less than five years old you can return them for a free replacement, after five years you have to pay for new plates.
Ontario law requires that your plates be legible and you can be fined if your plates are obscured or illegible.