Once you found your way in, it's really addictive. However, if you could make the introduction a little easier to grasp, more people would give it a try.
Just providing the means to have a profile page is not enough to have a social network anymore. There had to be a continuous stream of information to keep users coming back (buy friendfeed, guys!). But then again Google always had success by keeping things simple...
Facebook. You can tag your friends and they will be notified. That's a huge advantage, because not only the tagged person comes to see but also her nosy friends.
The consequence of being #2 on users, uniques or pageviews is not neccessarily being #2 in revenues. I think loosing money is what puts you out of business sooner or later.
While I can perfectly understand you I'd suppose that the older generation also spent some of the money for your health, education, security and relatively carefree childhood. Many of them were in an undoubtedly more desperate situation during and after WWII than we are today. They pulled up their sleeves and ... you know the rest.