This is a great bit of transparency where Dan Fernandez tells you, in his own words, the history and reasoning behind the VS Express. 

Fast forward to RTM, and we’ve now had over six million downloads in eight months. That’s a huge number and is a phenomena in and of itself, especially when compared to other category leaders like Sirius Satellite Radio (~3 million listeners) or World of Warcraft (6 million players). While that’s not a fair comparison as Express is free, you at least get a sense for how big the market is.  We did an Express customer survey in March, 2006 and the data showed that 61% are brand new to .NET and that we were in fact getting new customers.

Source: Dan Fernandez's Blog : The Hobbyist Renaissance at Microsoft