When asked why Dropbox decided to require people to have a single "Dropbox folder," instead of allowing people to designate their own folders, Drew Houston the founder of Dropbox, emphasized the enormous need for simplicity early on in their product roadmap:
The initial reason was that it was the simplest thing that could possibly work and make sense. The alternative, permitting multiple folders, adds technical complexity and a lot of hairy configuration & installation UI, which are both time consuming to build and hard to get right.
First, the extra flexibility wasn't actually that important to people, and second the simplicity of the mental model had a number of unexpected benefits.
Forget to focus on your core features by adding too many too soon and you might just confuse your customers enough to lose them. Here is a great quote from Isaac Hall, Founder of Recurly.com, which had the same functionality as Dropbox, but lost because they made the mistake of adding too many features early in the game.
In the end, it really came down to one incredibly genius idea: Dropbox limited its feature set on purpose. It had one folder and that folder always synced without any issues -- it was magic. Syncplicity could sync every folder on your computer until you hit our quota. (Unfortunately, that feature was used to synchronize C:\Windows\ for dozens of users -- doh!) Our company had too many features and this created confusion amongst our customer base. This in turn led to enough customer support issues that we couldn't innovate on the product, we were too busy fixing things.