I think that the lifestyle described would be amazing except for one fact: limited electricity and no internet.

Electricity has only been widely available in the last eighty years or so, and the internet the last fifteen, but neither of those obstacles prevented great accomplishments or happiness to flourish. I'm guessing that the limited social interactions, movement, and separation from loved ones are all worse on the inhabitants.

I think that for a period of less than one year, that could be what makes it amazing.

Surely they could get some reading done?

Bring a ham radio station, that would be my plan.

You should see some of the places ham radio operators do "DX-peditions", like the nearby Scarborough Reef:

http://www.scarboroughreef.com

Yes, I know a couple of these dudes.

In 2000, we went to Vanuatu and stayed in a mansion, hardly as severe, but we did do some technological firsts. Shortly before that, there were people at kingman reef, which is max of 3 feet high and they had to bring their own floor.

I wonder what's the minimum environment size for humans in general to stave off "cabin fever"?

You could ask the guys on the ISS or those that did the experiments in Russia on close-quarters living in prep for a Mars mission. Or submariners, lighthousekeepers ...

I wonder if it's an issue of variety as much as environment size.

That, plus something to do, something to keep your mind occupied.

This article is pure comedy:

"So far, one baby has been born on the island, but many more have been "assembled" there, he says."

... I wonder if there's surf there.