Joel on Software: "I think it is a misattribution to say, for example, that the iPod is successful because it lacks features. If you start to believe that, you'll believe, among other things, that you should take out features to increase your product's success. With six years of experience running my own software company I can tell you that nothing we have ever done at Fog Creek has increased our revenue more than releasing a new version with more features. Nothing. The flow to our bottom line from new versions with new features is absolutely undeniable. It's like gravity. When we tried Google ads, when we implemented various affiliate schemes, or when an article about FogBugz appears in the press, we could barely see the effect on the bottom line. When a new version comes out with new features, we see a sudden, undeniable, substantial, and permanent increase in revenue."
I can add, from my experience, that the number one reason Blogger lost users (even during the times when the service wasn't very reliable) was due to lack of features. We didn't add them fast enough, and others did. And even casual bloggers who weren't complaining about lack of features often became more active when we added them.
As Jason Goldman once said, "Paddle 'em with features!"