I have heard some claims that SVN handles binary files better than Git/Mercurial. Is this true and if so then why? As far as I can imagine, no version control system (VCS) c
Text files have a natural line-oriented struture that binary files lack. This is why it's harder to compare them using common text tools (diff). While it should be possible, the advantage of readability (the reason we use text as our preferred format in the first place) would be lost when applying diffs to binary files.
As to your suggestion that all version control systems "are crap at handling binary files", I don't know. In principle, there's no reason why a binary file should be slower to process. I would rather say that the advantages of using a VCS (tracking, diffs, overview) are more apparent when handling text files.