The original iPod, chunky by today's standards was by far the smallest and easiest to use mp3 player that could carry more than a few hundred MB of data. At the time there wasn't any Windows support but I think 3rd party software became available if you had Firewire on your PC.
From Wikipedia: iPod
"The iPod line was announced by Apple on October 23, 2001, and released on November 10, 2001."
From Wikipedia: iTunes Store
"It opened on April 28, 2003, as the iTunes Music Store"
See iPod sales chart:
http://upload.wikimedia.org/wikipedia/commons/3/34/Ipod_sale...
Pricing also was an issue, they were very expensive.
Another factor is that the market was smaller, Apple dominated the market very quickly (at least if you count the market as large capacity devices until they had the shuffle).
The iTunes Music Store was probably a big reason why people upgraded to new iPods, though.