In my mind, the appeal of perezhilton.com is actually both simple and complex. The distribution world of celebrity gossip used to sit firmly in the supermarket checkout line. Publications like the National Enquirer literally made a living out of being an impulse buy for food shoppers. But the format, newspaper print, wasn't great - and the brand wasn't pure: the gossip items were muddled in between stories about aliens and JFK sightings (this is presumably because, unlike today, where everyone has a camera phone, there were some days when celebrity gossip was slow - so you had to come up with something).
This opened the door for magazines like People, US Weekly and OK! Magazine to put together slick weekly mag's with sharp pictures and in depth cover stories - legitimizing the medium and taking the readership from the tabloids. So fast forward to the online world, and these folks should own the market, right? Well, no. Similar to newspapers, these folks haven't figured out what Perez Hilton did: the format is different and therefore the product needs to be different.
So what did Perez Hilton do? He took the part of the celebrity gossip world that really anybody cares about, the pictures, ripped them out from the rest of the magazine and created a publication solely devoted to them. Well, not solely. To differentiate his sight from other celebrity photo sights, he leverages his background knowledge of the celebrity "scene" to contextualize the pictures - and then adds his own bit of personal commentary to make it interesting.
In many ways, its very similar to what Drudge did to the news business. He ripped out the most interesting part of the newspaper - the headlines - contextualized them within his brand and added, through his re-writes, his own personal commentary to differentiate form the competition.
Also, like Drudge, Perez Hilton employs what I call, the ugly/ functional design. Whenever you go there, there is no mistake - the pictures are the stars of the site. He puts them front and center. The rest of the site, commentary, navigation, etc. complements this. Lastly, Perez is tireless - or so it seems. His site updates more often than pretty much any blog out there. Which of course only encourages repeat visits.
Is it working? Well, according to Hitwise, Perezhilton.com is the 283rd most popular site on the net. It's competitors - People.com (210) and TMZ.com (272) rank slightly higher, but both of those are AOL Time Warner sites, so get a lot of captive audience traffic. US Weekly ranks in at 2043.