You're totally right, Facebook was completely wrong for you. A device like this sounds like it would really work for you. It's very focused on preserving privacy and giving lots of control over information, highly technical and sophisticated, allows you to write as much as you want, and is completely new and unknown. Unfortunately if you want to use it to socialize with the unwashed masses all of these reasons will stop them from using it with you. They LIKE all the stuff you hated about Facebook. For them it's benefits are:
Simple
They just type something and click the button and their friends can see stuff. Sometimes they change the UI and everyone spends a day or two talking about how the old way was better until they get used to it but it's still pretty easy. To find your friends you tell it where you grew up, where you worked or what your email is. You pick them by their names or pictures. Simple. The lack of lots of control and options are part of this. As more and more people are starting to notice or hear about how Facebook can expose your data they are having to add more controls but simplicity will always be more appealing to most people.
Popular
Everyone is on Facebook!!! (they love exclamation points too -- I know...). People you haven't seen in years are on there and sometimes someone you knew from a long time ago will find you. Isn't that great! Popularity and trendiness are a great feature of Facebook and other products for a lot of people. They love joining groups and knowing that lots of people love the same things they do. All of these things were popular pre-social networks and Facebook has done an adequate job of bringing them to the masses.
Fun
Pictures and games!!! You get to see pictures of other people doing silly things. You get to see pictures of your sister's kid building a snowman and strange places where old friends go on vacation. And they have games too! Not complicated games or games that take a long time but simple things that you can play with your friends if you have a minute or two. Casual gaming's appeal is that you can learn the rules quickly, play during breaks at work or home, and play with people you know (Farmville and the like).
You have different values and interests than the average person on the street but you probably know this already. I hope this gives you a little insight into some of the reasons why Facebook is appealing to a lot of people out there.
My problem with this product is that I think its audience will naturally be limited and that will decrease its value as a social networking appliance for a lot of people. If it only appeals to a small and technical audience why bother with hardware at all? Just make a software version of it and call it a server. The people who will use it will know that means put it on a machine you leave on and connected and they might already have one around.
Depending on your skill set you might even be able to put something like this together out of existing tools. If you have a couple of friends who share your interests and are into technology a solution like this could work for you. You'd give up randomly bumping into that kid you knew when you were 9 but you may not see this as a valuable feature anyway.