Great question. It started off as 1.3.x but ended up being 1.4 for semver issues. There was discussion[1] about this. In short - it was named 1.4 because of how NPM updated and because of the big features landing.
So issues beyond the control of io.js then? Makes more sense, just unfortunate I suppose.
Not really unfortunate. Unlike with money, inflation of version numbers doesn't cause that much trouble. It just takes some getting used to. I've gotten used to the high version numbers in Chrome and Firefox, and I'm sure I'll get used to them in projects that use semver the right way as well.