I'll leave you to decide on the artistic merits of the video for yourself, but if there was ever proof of both (a) that what goes viral and what does not is as much down to circumstance as it is to anything else, and (b) the power of social networks to shape and channel popular opinion, then this must surely be it!
UPDATE December 2012: Unfortunately, You Tube seems to have disable embedding of thisvideo so you will have to click through on this link to watch the Gangnam Style video. It has now been watched over 930m times.
See also: The difference between Viral Marketing and Viral Business Models
As an interesting addendum, there has been a discussion on Quora about how much it cost YouTube to stream a video like this: The top voted answer suggests that by 23 October 2012 at which time it had been watched 530 million times, it would have cost YouTube about £300k, but that they would have earned about £350k from advertising revenues off the back of it.
Update March 2013: Since writing the post above, I came across this TED Talk by Kevin Allocca of YouTube on why videos go viral. He ascribes it to three reasons (1) tastemakers: those famous people we look to for fashion and taste, (2) communities of participation: people who adopt the meme create spinoffs, and (3) unexpectedness. Watch the TED Talk below: