I found that when introducing new players to LBP I had a very similar experience. They loved the music, visuals and sackboy. However some sections proved a bit challenging for them, and although they were enjoying themselves even when they died, they did need a little guidance to get past a few sections in some of the very early levels.
That's the difference between LBP and say Mario. You can fly through plenty of the early levels of most Mario games with virtually no guidance. A person who has never played a game before can simply pick up the controller and get the hang of it in minutes.
The controls in LBP by contrast are slightly more complex and puzzles and physics objects must be completed or moved to progress. It definitely has a slightly higher learning curve.
As for sales of the game, being on the most expensive console on the market certainly didn't help.
