The truth is that people do prefer multifunction devices when given the option but they are rarely willing to pay more than they would for the "device" they are actually buying ...
As an exaple, I see value in a DVD player up to about $50, the value of a videogame system up to about $300, and the value of a Blu-Ray player up to about $300. If my DVD player breaks I'm not going to spend $300 on an videogame system to replace my DVD player; even though I would like a Blu-Ray player sometime in the future I'm unlikely to buy a videogame system for more than $200 as a Blu-Ray player.
The only exception to this is if someone is in the market for both devices and see the combined value of both devices being drastically higher than the multifunction device itself; basically, if you are in the market for a game console and a Blu-Ray player, you see the Blu-Ray player as being worth $400 and the game console being worth $400 then you may see the value in a $500 to $600 game console/Blu-Ray player.
