They are the de-facto messaging service in the rest of the world (except for China).
We do pay more than $1 per year for unlimited text messages but I don't know anyone that doesn't get unlimited text messaging these days.
Everyone either has unlimited texting (the price of which isn't considered since they get it with a cell plan that they want for other reasons (probably data)), or keep it under the monthly free limit.
FWIW, I'm in the UK, and I'm not aware of anyone who uses it here, either. I too have heard the name mentioned once or twice in the past, usually for undesirable reasons related to things like security or privacy. Even looking them up today, I don't quite see the attraction: what is the USP here?
Seriously, I went to sit in with a few University freshmen recently here in Germany and they all used it. (They didn't know the Back to the Future movies, though!)
But I was talking to a former colleague who is EVEN OLDER THAN ME - over forty, in fact! - and he was saying he has used WhatsApp. Has been using it for a while, in fact. So, it looks like my age isn't to blame here - I am just hopelessly behind the times.
(He said he was going to stop though, now that Facebook have bought it. I pointed out that due to his age, Facebook probably won't care.)
I'm the same as you - heard the name, never used the app. In the recent 4-5 months though all of my friends migrated to WhatsApp. I'm from Eastern Europe and when I cruised around other countries from the region there were many people who used that too. Maybe has to do with the fact that some telecoms still charge insane prices for a piece of SMS when you deplete your free quota.
7% penetration in the US, 16% in Canada, 84% in Germany, 97% in Spain.