This movie shows that you can make a low-budget, low-tech movie that still captures an audience.
I think it did so well because people of all ages and generations felt a kinship with Napoleon. Yea, we laughed at him, but deep down inside many of us knew what it was like to be him.
Kip and Uncle Rico were even more pathetic than Napoleon and gave even those of us who might feel embarrassed for Napoleon an outlet for our own derision of losers.
Napoleon is the hero because in the end, he never sells out. He is who he is and we come to like him for that. Kip transforms, or is allowed to be manipulated, into something different. Rico is even worse in that he's never left his senior year in high school lamenting the fact that he wasn't put in the big game.
In the end Napoleon actually gets some recognition (his big dance number, which in his own nerdiness was cool) and the affection of a girl. She might not be Summer Wheatley and it might take him awhile to realize he can't have the Summers of the world, but as an audience we know that he's going to be okay. People like him for who he is. And it shows those of us that maybe don't fit in so well realize that we're going to be alright as well.