I think the answer is obvious: people prefer no ads. "Advertisement" is a dirty word. People want a free, ad-less product, despite the fact that it's economically unfeasible.
That's a problem. What happens when it becomes more widespread or easier to install things like adblock? What happens if a browser comes along that blocks Facebook cookies and ads by default, but still allows the basic functionality of FB? Don't say it can't happen. We're just getting to the point in society where having everything about us on someone's server is "normal". Wait until there's a disaster of some sort, a major security breach, and see how fast people change their habits. It can happen overnight.