I have had «power steering failure – drive to dealer slowly» error message. Power steering did not function at all. This happened at startup and both times after parking in reverse with quite heavy usage of steering wheel to maneuver in to place. (its abarth with 17s so quite a load on the power steering motor)

After diagnostic and reset by dealer it works fine. The dealer plans to replace complete steering mechanism if the error comes back.

Anybody had this problem?

I have a Punto JTD with the same electric power steering (same principle at least ), and the closest i've been to your problem is when the city function stops working due to the electric motor overheating (after heavy usage with city function enabled), but after a few minutes it activates the city function again (it's supposed to be like that so you don't burn of the electric motor).

Perhaps it just disabled the whole power steering in your Stilo by mistake and not just the city function.
If the dealer will replace the steering mechanism at no cost to you if the error returns, then I wouldn't worry (if it is bad, your unlikely to get to broken steering mechanism's).
and i hope it's not a common mistake, as i'm going to sign the papers for a new stilo tomorrow