My parents got it for me (an expensive gift!) When I found out it didn't actually talk, but instead had a cassette tape with "conversations" pre-loaded onto its back, I never picked it up again.
Though I was really young, I still remember the disappointment and anger it caused me. "But the commercials...they said it talked!"
I do think we could use some of our tech genius to make better toys that delight and transform kids. What sort of programming would a real sorting hat require? And wouldn't that be way more fun than Yet Another Social Network? Food for thought.