Personally, I think the domains are a great moneyspinner for them - the rate they have been flying out of the door at $2-4 a pop has to be seen to be believed - but for the investor they are the weakest link. The only real value is in getting the internal traffic moving to your site redirect and that is only likely to happen for the really, really premium ones.
By far the biggest draw is the Celebrities (the opportunity to manage a virtual Angelina Jolie is something a fan might pay a premium for) and the Cities - becoming the Mayor of your home town is kinda cool.
If they resolve some of their technical teething problems and improve the stickiness of their offering then it has possibilities of becoming viral.