Grey - the Greek language reform was by all accounts a failure. The demotiki of Athens (itself a kind of koine, since at the time of independence Athens was home to only a few goat herders) became the standard dialect despite the best efforts of language planners to create something called katharevousa "the purified tongue" on the basis of New Testament Greek. This is still one of the official languages of Greece but it's not very popular. I'm afraid I don't know much about Phanariote.
When I was in Corfu some of the older Greeks tried out their dialect on me, as it was basically Modern Greek grammar with lots of Venetian words. I found it surprisingly comprehensible, and wished that I had learned more.
Paul - there are several major dialect areas in the Arab world. One is the Maghreb - basically everything west of Tunis. The language spoken there is incomprehensible to everyone else and there is much debate among Arabs as to whether it is actually Arabic. Another dialect area is Egypt, Libya, and the Sudan. A third is the Levant - Syria-Palestine, and portions of North Iraq as well as the Christian dialect in Baghdad. A fourth is the Gulf - Southern Iraq, the Gulf States, and Khuzestan in Iran. Finally, the Arabian peninsula is another dialect area, IIRC, although there may be important differences within it.
The people within these regions can more or less understand one another, but when you move out of the region, comprehension difficulties begin. Arabic speakers from different regions compromise by moving to higher and higher registers until they final reach common ground. A Beiruti speaking to someone from Damascus might drop all "Beiruti" slang in order to communicate, whereas if he were speaking with someone from Algiers he would move entirely to Modern Standard (Newspaper) Arabic. There is general concensus among Arabs as to what constitutes slang (that is, features of their dialect that are not present in others) and what features are more international.
Interestingly, each of these regions comprises an innovative center and more conservative periferies. Consequently the dialects of Cairo and Beirut are "wierd", but Sudanese or Yemeni are quite "normal" to people who speak Modern Standard Arabic.
In Europe, these "dialect areas" would probably be individual countries.