Business psychology I don't quite understand yet: People are often willing to pay more money for a product that does one thing than they are for a product that does fifty things. I see this a lot in software sales.
I think the execution was unusually good (light years ahead of any of the sub-products), which is extremely rare. They also stopped the "phone, iPod, internet communicator" schtick soon after the initial announcement. I quickly became its own category.