As it is, the bare bones card needs about $15 of bits to be useful
The trick is to use the bits you already have for your Raspi2 and program your application on the RaspiZero. At $5 plus an SDHC card, PSU and a $3 USB ethernet interface you now have a capable headless media or other server.
Using the same process, one can produce an Arduino like application using the GPIO pins, but without the need for a second computer to do the programming and the burning of the code to flash. The other differences are that most of the interface and driver code is already in the Zero Raspbian operating system and works 'out of the box', the available memory is comparatively unlimited and the performance is much higher than the basic Arduino (high speeds at the bit level being the main limitation because of the non-RTS Linux desktop operating system being the base).
The other drawback is power consumption. To use battery power, there is already a Raspi flywheel power supply circuit which is easy to build and supports a higher capacity power supply than a simple linear circuit and a PP3. The video and any other unused power draining features can be disabled in the SOC bringing the power consumption down towards the ARM-based Arduino boards.
I see your point about using the Zero as IoT or wearable electronics. However, the Raspberry Pi Foundation is not about IoT. It is about about encouraging folk (young folk, especially) to get to grips with computer making rather than computer using. The Zero makes it economically feasible to allow one computer per project. The other models are still too expensive to dedicate to a single project.
The Zero is still a good prototyping basis for Open Source IoT, Once you have a proven design, you can replace Raspbian with embedded RTS Linux and have a dedicated ARM plus peripherals board manufactured. For a one-off maker project, load the SDHC card with embedded Linux and use cheap peripheral boards (they will be produced in China in no time once the demand is there - just like the Arduino). The Zero is small enough for proof of concept, as opposed to a Windows 10 computer or an Android tablet.