Were the investors throwing money at oink or at milk? If it is the latter this decision makes sense.
Using money to fund ideas that may or may not pan out is an interesting concept and kind of cool and if they decide to throw out ideas that don't work rather than stick to it that just defines what milk is.
So as a consumer, why would anyone ever even try Milk's products until they clearly become viable? You are being asked to give tons of your time and energy to build out their product (user generated content), recommend it to your friends, and do their word of mouth marketing, and in return the company has no loyalty to you unless its spectacularly successful.
And in contrast to the Milk model, you have sites like Delicious, Flickr, and even Digg itself which still operate even after the original founders have moved on.
What percentage of Oink users knew Milk's philosophy? What percentage of them cared?
More to the point, what percentage of potential users for their next app will know about Milk's philosophy (or care) when they see it in the App Store's "Featured" section?
It might make the news, and it's a good talking point, but I can't help feeling the naysayers are just stuck in an echo chamber on this.
Using money to fund ideas that may or may not pan out is an interesting concept and kind of cool and if they decide to throw out ideas that don't work rather than stick to it that just defines what milk is.