The apple iPod example is out of place: you can't compare software to hardware. Essentially, with hardware, you have one chance to make a good impression, so every detail counts (for example, the first Zune wasn't much of a hit, and now virtually no one likes Zunes, even the very awesome Zune HD).
These days, with software - especially web software - people tend to be more forgiving of bugs, and because its easy to provide feedback, software tends to get better and better.
The real problem with hardware is that you can't revise it. That used to be a problem with shrinkwrap software, too -- it was revisable, but only by shipping out a lot of physical disks marked "upgrade" and praying that people installed them -- which is why it used to be so much harder to embrace the "ship early and often" plan.
One commonly-overlooked disadvantage to releasing early is that it may hinder your ability to construct a barrier to entry. It's true that many people spend too much time worrying about competitors, but the fact is that if you build something successful, competitors will arise. It's important to understand and make use of the aspects of your company that other people will have trouble emulating, as they can potentially result in a much bigger head-start than simply releasing early.
(Disclaimer: If your company is such that the best barrier to entry to can construct is a large user-base, then releasing early makes a lot of sense.)
I'd have to agree. Releasing early can definitely be a good thing, but it shouldn't come at the expense of quality. Release sooner by narrowing scope and focusing on those core features rather than by cutting corners.
Another important consideration is your market. If you have a revolutionary technology and are trying to create a new market, you can probably afford to release something that's a little rough. However, if you are trying to compete in a mature market with a product that only marginally improves on the competitors, it will probably need to be more polished.
These days, with software - especially web software - people tend to be more forgiving of bugs, and because its easy to provide feedback, software tends to get better and better.