They're charging hyperscaler rates, and anyone willing to pay that much won't go with Fly.
For serverless usage they're only mildly overpriced compared to say Runpod, but I don't think of serverless as anything more than an onramp to renting dedicated machine, so it's not surprising to hear it's not taking off.
GPU workloads tend to have terrible cold-start performance by their nature, and without a lot of application specific optimizations it rarely ends up making financial sense to not take a cheaper continous option if you have an even mildly consistent workload. (and if you don't then you're not generating that much money for them)