Definitely agree that Craigslist could be a better site; but what about a better business? It seems that most of the sites that have taken on Craigslist have offered technical improvements; I.e. mobile apps and social integration.
What about non-technical innovation? What about an aggressive, real world sales force that solicits businesses?
There's always room for new entrants. What about Google overtaking Yahoo and Facebook overtaking MySpace? In hindsight it's easy to point out flaws, but at the time, each of the respective sites were their markets leader.