No, it's not niche.
The game isn't just a creation tool. You could waste countless hours playing the story mode or random levels online, without ever touching the create mode! I still haven't ventured into the create mode since buying the game, because I don't feel like redoing all the tutorials I did in the beta, lol.
And just look at sales. The game will probably be past a million when last week's numbers come in, and it's only been out a month! It's one of the fastest selling ps3 games yet, tracking between Uncharted and Call of Duty 4, more on the CoD4 side of things:
http://www.vgchartz.com/swlaunch.php?reg1=All&game1=LittleBigPlanet+-+PS3®2=All&game2=Call+of+Duty+4%3A+Modern+Warfare+-+PS3®3=All&game3=Uncharted%3A+Drakes+Fortune+-+PS3&weeks=100
