The referral-based strategy may have limited the user base for a while, but after all the press they've gotten lately, it's certainly no longer working for them. (Besides which, if the goal was to keep using that as a strategy long-term, a more explicit invitation-based system, a la forrst, might have been more sustainable.)
Unfortunately for them, what really attracted people to quora originally was more that the initial users were an interesting group of people, than anything particularly unique that the software was doing. Now that everyone and their dog has an account, the really interesting stuff is rather harder to find, for the moment; their challenge is dealing with that before "no one goes there anymore; it's too crowded."