Most of the non-tech users I know respond enormously negative to changes, so much so that any improvement would have to be gigantic indeed to justify that cost.

To immediate, drastic, noticeable changes.

Amazon, which arguably has the same userbase, has successfully managed to change their interface over the years by gradually adding functionality.

Craigslist has only bullied others who make a better experience for users.

The types of people who use Amazon, are going to be different then the types of people who use Craigslist. You said it yourself, Craigslist is the internet classifieds. Young people don't use the classified sections, it's predominantly used by those who would have used the classifieds in a regular newspaper, the older, geriatric population; and these people just don't appreciate change. It may be a positive change, it may make things easier, but they learn one way to do it, and gosh darn it, that's exactly how they want it to work every-time.

I should add, I think craigslist is one of the few sites out there that can get away with not updating their UI, so it's not so much that I disagree with several of your points, as it is, I disagree with your points in this specific case. :)

From my perspective, it's just Craiglist has done a magnificent job of evaluating their user-base.

They do, but as long as the change is generally positive they eventually come around.

Each of Facebooks major UI/functionality changes over the years has come with a heap of resistance from users. Not many though if given the choice now would want to undo the past 5 years or more of changes.