Having a good working product is definitely important, for one it brings more trust towards the project itself. Members will feel more comfortable with investing in a project that has an physical product. If a working product is not available, then a prototype or a demo is needed that will show how the actual product will work.
I agree. I think a project with a product has better chances of prospering than those that are only imitations of older concepts or products because people tend to support new ideas than old ones. That is crucial because there are so many projects coming out seemingly every second of the day, and if you won't find good ones, then you can be certain that your investment would just go down the drain because either it won't receive enough support or it will be a total failure.