You must have been living alone in a cave for the last 10 years or so.
Even the lowliest version of Windows has had individual password-protected user accounts since at least Win2000.
Even my throwaway cell phone has password protection as does just about any PDA.
Anybody with children or unrelated roommates or frequent guests will likely find themselves in the situation where they want to share network access over their LAN but still maintain some privacy over their personal data.
I'm not referring to what security is available, but rather what is actually used.
I also do not live alone but rather with a very computer literate family - six members, with four desktops, six laptops, a Windows server, miscellaneous PDAs and handhelds with network access, a mixed wired (100/1000) mbps and wireless (802.11n) network, supporting multiple network printers - including laser and color all-in-ones (and yes the all-in-one is fully functional over the network).
To get back to security - did you chain your DNS-323 down or can your room mate walk in and just pick it up?
Oh - I forgot - I do network implementations (among other things) for a living, and that includes firewalls and wireless with 802.1x and PEAP, you know the one where every wireless device gets it's own strong encryption key, with the keys being randomly generated and automatically changed every fifteen minutes.
I point out the above only so you recognize that I have a healthy understanding of network security and how and when it actually gets used - sure you can lock your network down, and change your passwords every thirty days, but then you end up with the users taping them to the underside of the keyboard - I've seen one SecureID installation (password changes every 60 seconds), where the used kept the SecureID fob in an unlocked desk drawer with the user name taped to it.
A couple of points - the "security hole" requires you to have specialized knowledge - at a minimum the URL required to access it, and the user level security offered by the device is in my opinion is adequate for most homes where Windows is the dominant OS, your average Windows user is not going to fiddling with http to get access.
On the ftp issue - the device is as secure as any other ftp device - you post in the other forum, you've seen the warnings about how rapidly your ftp server will be compromised - try this - I've been running an ftp server on my DNS-323 and allowing anonymous access for several weeks now, access is logged at the firewall, and the only thing showing in those logs is when I access it - you go onto mention this being deceptive because you can access it using http - if you have provided port 80 access to the device, yes, that access would be possible, but I would question the reason for providing port 80 access.
If the DNS-323 is used as intended, in the environment in which it was intended, the security, whilst not top notch, will be adequate for most users - even with the present "security hole".