Having spent just enough time with the waaaay over-hyped Facebook to be dangerous, I will now offer the definitive explanation for why people use the thing. Facebook is the Microsoft Office of social apps.
In other words, none of the apps are particularly good — photo sharing, status updates, personal pages, events, groups, etc. — let alone being as good as their standalone counterparts — Flickr, Twittr, Typepad/Wordpress, Google Group, etc. — but most people don’t care. They just want their social software all in one place, all from the same interface, and then they want to move on and get their (social/presence) work done.
To go one level deeper, like Office, Facebook has an operating system substrate to create lock-in. Where in Windows it’s about sharing file format compatibility across apps and sharing some crummy UI features, in Facebook it’s about sharing social/presence data across apps, and … sharing crummy UI features.