In a way I agree and in a way I disagree.
I agree that no matter how many hundreds of ETFs exist, any retail investor (or someone like me who manages separate accounts for individuals) will only need a handful at the most. I don't really use ETFs like large-cap value or mid-cap growth -- I prefer to get narrower effects. But for folks that do use these types of ETFs, there are a slew of them that get no attention that could be better than the more actively traded ones from iShares.
This chart captures some (I know I left out the iShares Morningstar version) of the mid-cap growth ETFs; we've got two from iShares, one from Rydex and one from PowerShares.
I don 't use any of these, but plenty of people do. I would think that anyone using one of these funds should know the others exist, and if they can get a handle on why PowerShares Dynamic Mid Cap Growth ETF (PWJ) lead the way and form an opinion about whether it continues or not, might want to switch. Well maybe not -- but I think the ability to have some choice is a big positive.
Lastly on this is the ProShares Double Long Mid Cap Growth (UKW), which mimics twice the iShares Russell MidCap Growth Index Fund (IWP) charted above, the second best performer of the group. Could someone who would put $10,000 into IWP put $5000 into UKW instead, leave $5000 in cash, earn 4% on both as a valid strategy? It is plausible -- even if it is not for you.