Facebook wasnt cool. The people on facebook were cool. I believe facebook took off for two reasons. One is the one you mentioned, that it was exclusive. Two was that it was the anti-livejournal/myspace. No css, no glitter, no strobing, no sound, no hard to read colors, no moving elements around the page. IT standardized where and what functions looked like, and acted more like creation software (photoshop) than the output of the document layout tools. Facebook was utilitarian in that you couldnt customize its look, you couldnt express yourself. It took itself as a white pages, not a portfolio.

One of the best features of that era was the network pages - your college email gave you access to an area solely for your college, where events could be organized, had a posting board, I think its own gallery, etc. When it went public-access this was among the first things to go, replaced with the more generic groups.