Re #2: I remember hearing about WhatsApp from my friends in 2009 or 2010. They said, "it's basically BBM that lets you communicate with non-Blackberry phones for free." Since those of us who had Blackberries used BBM non-stop, it was a no-brainer to get WhatsApp.
2. yes, word of mouth only... but we helped people spread the word by putting "Tell A Friend" functionality into the app :)
3. it helped us pay for office space, salaries and server bills without eating much into VC or angel money we had in our bank account.