Because someone hasn't done it better yet. People dumped MySpace for Facebook because Facebook was there. People are going to dump Twitter because ..... ????
So which is it? Was Facebook 'just there' or was it better? If MySpace was akin to a teenagers bedroom, Facebook was their college dorm room (cooler, less cluttered, more grown up). Facebook seems to be doing what they can to stop people from evolving into their own house/apartment (which in my mind is a self-hosted or self-controlled application).
The fact that FB is growing with the old folks means something has gone right for them where it didn't for MySpace.
I would tend to agree with you. With public status updates (basically twitter), a good JSON api, and a more integrated experience I'd say Facebook is probably the best bet.
Now, I'm also a privacy-fanatic and I think what Facebook has done with our data is slightly evil. This is, of course, only because I was the first "class" as it were in 2004 that lived with Facebook through all 4 years of undergrad. Needless to say, there's a lot of stuff on there that I no longer identify with.
I've since started using Facebook as an "identity platform" for which I can shape my public perception, keeping my private life offline completely.
Of course, this is what Zuckerberg wanted with living responsible adult lives with transparency, but what it really comes down to is it will dilute the platform because what is "public" will be your front-facing perception.
All that said, Twitter is still doing a good job with a low-overhead buy-in. Signing up for Facebook is signing up for way more than most want to.
