What promoted the insane demand for Furby's wasn't so much it's cuteness. Some thought it was adorable others thought it was a demon owl from hell.
You either like this thing or you don't. I tend to like it most of the time but am grateful sometimes for that off button- something not available in the '98 models!
People thought these things were like real AI perfected robots (yea for under 100.00? I think not) that could learn, grow, and even one day have a conversation with them about why their girlfriend thinks they're so amazing, or give them advice like Apple's "Siri". I can see a Siri type interface and a Furby mating- possibly a Furby running off an App that does more than just translate but rather can Google search (Google Furby?)- why not!?
The reality, however, is that on the "chip" powering this bad boy (or girl) in 1998 is a form of interactive programming like a basic interactive website that can learn and store preferences or even just events happening on the page. It's not so "obvious" how to befriend this cute trible (star trek reference) as it has a bit of dynamic programming inside. It has in 2012 6 times the memory of the original model.
One of the cool things about the 2012 model is the programming is based on human social interactions and since we're all different, act different, and react different, each Furby experience and "evolution" will happen differently which is what gives it it's uniqueness.
I think of it like a video game- fixed parameters and rules- boxed in artificial intelligence with interaction- but it's the players that make the game do amazing and cleaver things.
Like a video game with a memory stick- the Furby has a memory of it's interactions and it's future interactions are actually triggered/programmed reaction events based on the Furby's past. Not a bad idea right?
It's down right cool when you add the latest technologies to give it even more power- personalities that change and morph as you own it!