I have to imagine the overlap between Linode customers and smart phone owners was so large (and the cost of implementation so low) that leaving out hardware authenticators makes sense for v1.
This also requires having role accounts which aren't able to reset authentication settings when logged in, though, to really be good (or else you just disable tokens on first successful login).
Also works well for paranoid people who don't trust their phone, or people who log in only from a phone/tablet and thus where MFA is really one-device-authentication.
These physically secure OTP techniques are interesting, but shouldn't you have accountability at the system level anyways? If everyone has a two-factor device and a password, it's pretty tough to plausibly deny that you logged into a server. Someone would have to guessed your password and stolen your device.