It's useful for quickly getting an HTTP server. No one in their right mind would use it for anything more. There are plenty of other very good python web servers.
What are you supposed to do with an http server after getting one quickly? Stare at the open port? The only thing quick about SimpleHTTPServer is the startup time. Don't actually try using the server.
The specific instance that put me off of the python servers was when a friend downloaded a CableGate tarball and someone else wanted to look at it. No one had a flash drive on them, but the fellow did have python installed. One SimpleHTTPServer later and the tarball was being transferred at 100KB/sec, slower than the original download. The cables were all html anyway so let's try uncompressing the tarball and serving those. Now the server would time out instead.
What do people actually use SimpleHTTPServer for?
It means I can develop offline.
I've used it as a half-baked and very short-lived file-sharing mechanism before, similar to what you describe above. I haven't noticed the DSL-like transfer rates because my broadband ISP gives me dialup-like upload speeds.
Yes, it's terrible. But not useless.
Smaller files than you need to move around when using a 1 off http server.
It's not that useless that you're portraying it as. But I do however agree that it's below toy level. It's not for production or long-time use.