I wouldn't say that nobody likes Newsstand, but on a 3.5" iPhone screen, yeah, it's pretty pointless. Then again, so is Zinio. The problem isn't the "app" or "app shelf" itself, it's the format. An RSS feed or something like Flipboard, Instapaper, or Readability is something people can and actually do use to get information from an iPhone. I have no interest in trying to zoom in on what is essentially a PDF photo of a magazine on a tiny screen. Then again, there's people who have that same complaint on the iPad, and I actually like the few magazines I have on iPad.
Apple makes products "for the masses", but they absolutely do not "respond to the masses". There's a big difference. Apple makes products that are designed to be easy and consumer friendly. But they absolutely do not have a track record of responding to specific consumer complaints about their products, even widely-held ones (such as lack of expandable storage, can't remove battery, and on and on)