Form still follow function, it just that when function is there the better form prevails when people have to choose. :)
The definition of pretty is subjective to the users of the product, that's why we do research and user testing as Designers. That's my believe at least. :)
If I have to define a global standard of pretty maybe I would go for "Something that is familiar but still intriguing, something that reflects who we are" .
The sentence you've quoted in the response taken out of the article context can sound a bit limiting but the point was that when functionality is equal in two products people will desire the prettier one.
As for "pretty but with no functionality", in my opinion that's creative art. Pure expression of subjective creativity with the hope that people with similar view and taste will enjoy it. Again, the end of the article talks about few examples, when there should be balance, when the artistic side takes over the functional and vise verse.
Thanks Bona, for challenging the topic and bringing up this nice questions so all of can have a discussion!