Combined with network and lock-in effects, it's a great business on a good enough application and an obvious idea. Which makes it even more impressive.
P.S. I think many tried to do similar things before or after but failed. So I'm not quite sure what make whatsapp stand out. Any ideas? First comer? Better UX? Cheaper? Better cross-platform support? Better marketing?
Despite what seem to be a surprising number of detractors here, lets not forgot that it's a pretty good product - fast, stable, nice enough looking and very reliable.
It's also worth noting that if Google Talk / Messenger weren't such an inconsistent / unreliable mess, I'd never have gone for looking another means of messaging.
I'd say constant security risk outweighs the "burden" of one time registration step which is a pretty familiar for any user on the web and takes just a few seconds to complete. It's not a decent thing to do for Whatsapp developers to play on users ignorance.
It really shouldn't.
Seems to me you're grossly over-thinking what's important and/or understood by any majority of the tens of millions using WhatsApp.
Also, instead of promoting federated XMPP (which idea is exactly one time registration and communication with all other federated services), Whatsapp promotes its own walled service. Double failure the way I see it.