I think in an ideal world both exist, with node.js being a more stable lts release cycle and io.js being a more continuous release cycle. I think there's room for both release styles.
Isn't the problem they will at some point have some real or even perceived incompatibility. At this point all library writers will have to test on and customise for both projects. People are lazy so they won't do this. Then network effects take over and the bigger project wins.
Maybe I'm over simplifying. But I think that it's very hard for two very similar but slightly incompatible projects to prosper. See jenkins vs. hudson.