For a long time I was opposed to anything shorter than a novel- the full length of a novel somehow legitimized the act of reading for me. Short stories and novellas were for authors that didn't have the attention spans or dedication to write an entire book.
And then in the last few years I've become older and wiser. I've realized how much effort has to go into crafting a shorter story- trying to develop characters and some sort of plot in a limited space is incredibly challenging. I, of all people, have to appreciate a person's ability to be concise, given my penchant for wordiness. When an author is dealing with several hundred pages they have time. They have space. They have the ability to endlessly connect and weave. Short stories and novellas don't offer this luxury. In anywhere from one page to, say, 175 pages (there are so many different opinions regarding the upper end of what a novella is), a writer has to craft some sort of message that resonates with the reader. It would be like asking a musical group to create a song that lasts for thirty seconds instead of three minutes; it can be done, just not easily.
In terms of marketability, these texts are a bit of a gamble. Short story collections don't sell well and aren't as often picked up by publishers (how many first time novelists get their big breaks from short story collections these days?). And my personal opinion on novellas is that they pose a challenge in terms of sales price- the consumer expects a lower cost since they're shorter, but publishers aren't as inclined to reduce it significantly (maybe a few bucks).
I'm currently teaching the novella Chronicle of a Death Foretold by Gabriel Garcia Marquez with my students and have realized that this is the answer for reluctant readers. There are so many good novellas out there, and it's so much less intimidating to a student (and even adults) to start a 120 page book, as opposed to a 400 page one. In terms of teaching, most of the kids have actually read the books because it can be done in just a few hours (and because it has strong sexual and violent undertones). And now, because they've been able to handle this small dose of Marquez, and feel successful for finishing it, they're signing up to read One Hundred Years of Solitude for their outside reading.
Once I started thinking about it, and examining my bookshelves, I've read quite a few novellas. Shopgirl by Steven Martin, The Awakening by Kate Chopin, Of Mice and Men by John Steinbeck, The Turn of the Screw by Henry James, The Overcoat by Nikolai Gogol, and Night by Elie Wiesel, just to name a few (for a great list check out this one on Goodreads). Personally, I've started to use novellas and short stories as ways to ease into, or out of, longer, more dense texts. Sometimes it's hard to move from one long, intense novel right into another. I've also found that they're great when traveling, since I never seem to have extended periods of time to sit and concentrate, whether on the plane or in a hotel.
In conclusion, novellas and short stories are definitely worth investing some time into.*
*This is me simultaneously not knowing how to end this post and feeling the need to express my frustration towards teachers and students who use the phrase "in conclusion" (just conclude, for crap's sake- don't tell me you're going to do it! Would you tell someone you were about to punch someone in the face? No! You'd just make a fist and knock the douchebag out).