You don't succeed just by copying someone else that is successful; you must improve/innovate as well or no one will use your service in lieu of the alternatives they are already using.  The fact that there are so many alternatives which fulfill several functionalities Home will attempt to is actually really bad for Home.

As you yourself said, they have improved and offer more then what the others are putting on offer at the moment. There are 13million ps3 users to date. everyone of these will have this feature for free. In essence they already have a userbase of 13million not to forget, unlike the 360, they online offering is for free. 

keyboard and mouse have never been an issue, my friend is constantly messing about with the linux OS on the ps3, he uses a standard plug and play mouse and what you forget is, a lot of these people using the applications they are have come from using a previous application. e.g.

1) it started with excite chat a logn long time ago and other online communities then they moved to:

2) Microsoft chat rooms, which were closed down and then new applications were put on offer so they moved to:

3) Hi5, which was awesome again but eventually people got bored and moved on to the likes of:

4) wayne and bebo but soon they got bored and moved on to:

5) facebook and soon they may get bored again and move on again

(dont need to gasp) the bottom line is people get bored and they move on. Like you said innovation is something that keeps people coming back. Unlike these internet application, Home will be a living 3d community with constant changes and additions and far more visual splendor then any of the online applications along with the ability to play decent games online, converse etc It will be almost like a free never ending video game and i wouldnt put it past sony to implement the rpg style achievement system to PS Home. Home has infinite potential and if Sony keep up the upgrades and extra content they are putting up at the moment, Home will be a Uber success.