The size and I/O capabilities are desirable for anything from a plug-and-play media centre to building electronics projects. While there are disadvantages with respect to the latter, being able to write code on the Pi vastly simplifies things compared to microcontrollers.
It is also worth noting that a fully equipped Pi can cost significantly less than $200. Everything that you need to add to it can be salvaged e-waste: discarded USB power adapter, old keyboards and mice, lower capacity SD cards, as well as televisions are things that are often discarded in working order.
Edit: for clarification.
