GMail has 100+ million users[1]. Imagine how many they could have if they actually did ship something. Crappy development model or not, does it really matter? The thing is widely successful and any insight into how it came about is valuable as a learning experience.

[1]: http://www.ft.com/cms/s/0/fc3d8a86-02a0-11de-b58b-000077b076...