Well as far as I'm concerned they're Iced Buns.

Anyway there's a proliferation of stuffed fabric, felt and knitted buns and other edibles on the craft sites.

What's the attraction - they don't do anything for me but at the craft fair where I recently had a stall they were one of the few items which were selling.

They also seem to be popular as a motif on greetings cards.

Cupcakes are cute and I think cute is the appeal and it is cute that sells??  Appetising also seems to sell doesn't it and for those with a sweet tooth, anything sweet and edible looking would perhaps be very appealing.  It also conjours ideas of homemade apple pie (sort of thing).

I think food like things, when not made of food, appeals to people; especially it smells of that food, ie cheesecake or hot apple pie etc. 

I have to admit I do like the cuteness of them, I'd love to be able to make that whipped cone effect (I already have silicone bun cases so could easily do that bit).  I've seen some fabulous ones online but when I realised they were just from moulds, it didn't appeal - for me, the craft is in making a very ordinary shape into something different not just melting and moulding into pre formed shapes.  For me, that's something that anyone could do and a little mass-market.... I like the hand-made (not home-made!) effects when each soap or craft item is a little different from the rest. 

Oh I'm rambing now.