I'm not too sure what all you guys are complaining about. The value-added to this service is quite clear. Scenario:
a domain name I could purchase myself ranges from like...8 to 12 dollars annually (from a reputable company), and some go much higher.
Yeah as you noted this service isnt really intended for the heavy user but rather the person that wants a hostname redirection without long term commitments, hosts, etc. The undeniable reality of the matter is that the majority of servers wont be there in 3 months.