What a novel concept: users actually wanting to create and see ads because they are so incredibly targeted and relevant. I wonder at what point facebook lost their grasp around such a tightly coupled ecosystem.
Another big factor was the introduction of the news feed. Now people are doing the same thing as ads (though, on a smaller scale) by posting updates and having them read through the news feeds of their friends. The old 2004 ads were the only way to communicate between users without posting on their wall.