The allure is in pretending to own areas you're familiar with, and the first launch attempt had 1.7 million players from all over the world swamping the servers. The relaunch seems to be much more stable, and right now I'm impatiently awaiting midnight GMT to see my coffers replenished and make my next move.
I could envision this as the next leap in the MMO genre. Initial problems mostly have to do with people making duplicate accounts and cheating, something that a monthly or even just a purchase fee would reduce. The game would have to get a lot more complex to warrant a subscription fee, but I'll bet they're thinking about how to pull that off right now.
If they charged, say, $10 to create an account, then yes, a lot of that initial 1.7 million people would have stayed away (I wouldn't have; I'd easily pay that). Say just 500,000 of them were up for a $10 entry fee. That's still $5 million dollars. Or maybe they take the Zynga route and make most of the game free, with an option for micro-transactions via virtual currency. Who knows where that would go, but the track record on those models so far is excellent.
It's quite possible the game in its current state is too rife with cheating to be fun; I don't know yet, because I've barely just started, but so far it's fun. I think many of the problems a free game suffers from would be reduced with almost any sort of pay model and account validation controls. I'm very interested to see where it all goes.