Well, there is one group of customers who like this (and there are a few more phones like that) the most: prison inmates.
A while ago I read that they were planning to make the sale of such phones illegal in the US, because they are appearantly very popular among inmates. For obvious reasons - they are easy to hide and smuggle into the prison, and they are cheap.
The small size is not so new btw. I have a cell phone the size of a watch, and that was only 25$. The issue with so small phones really is, to operate them. The buttons and the display are then so tiny, that it becomes impractical to use.