Neither site, of course, can claim to be the first social network—Friendster and MySpace already had large followings in 2003. But both Facebook and Campus Network had the crucial insight that overlaying a virtual community on top of an existing community—a college campus—would cement users' trust and loyalty. Campus Network figured it out first. Facebook just executed it better.
There is some truth to this. Speaking anecdotally, MySpace was from the beginning open to everybody and for me led to a lot of annoying friend requests from people who, say, lived in the same town but were complete strangers (this happens occasionally on Facebook, but it's usually a friend-of-a-friend).
But there were other factors, important ones, too: user-designed MySpace pages and backdrops often caused browsers to crash. The blogging aspect, perhaps because it was so prominent (more than Facebook's Notes, by my reckoning) and combined with the built-in-audience aspect, was addictive, much more than I've ever found Facebook to be, which was the reason I deleted my account after only a few months. And I do think on some level the Newscorp acquisition rubbed a lot of people the wrong way. I hadn't heard much about Mark Zuckerberg before some of the more recent Facebook privacy complaints; Rupert Murdoch, on the other hand, is the conservative arch-fiend, The Man.
It still is amazing, though, that MySpace, at one time the most popular social networking website on the internet, could be so quickly surpassed and dethroned by the Harvard upstart.