Another reason it failed, they used Ruby--which at the time was a pain in the ass to install. (Would not install on 99.9% of shared hosts and VPS was still a new thing.)
I've said it before, I'm pretty sure it would work if it was built on top of WordPress. I'm sure this idea is in the back of Matt Mullenweg's mind somewhere. Gravatar has profiles now, but where is that going...?
Well, I shouldn't say it failed. I don't know. A few years ago I was out somewhere, can't remember the conversation, but this guy was telling me the Diaspora community is still growing and people are actually using it.