Totally free, open source, and offering a vast offering of office apps, with paid hosted versions.

When Mozilla was founded the idea of hosted webapps didn't exist. Quite the frankly web standards didn't yet exist to allow such a thing to exist. Those were the days when you'd use Flash, Shockwave or Silverlight just to view media content on the web.

But I do agree, they could be investing right now into feature rich hosted services, but they've only half-assed any paid services they've tried to integrate and then dropped them because they couldn't get enough users to make it worth continuing the effort (mostly due to the half-assed effort they put in to start with)