Yeah HoMM2 is better than the HoMM1 and in several multiplayer aspects even better than HoMM3.
But HoMM1 was the first game of the franchise. In 1995 it was really enjoyable and wonderful game. HoMM1 have his own unique Mage Guild/Spell system and a few other differences from later HoMM games.

Here's another vote for not grading old things (like games, and, well, like ME) down by virtue of hindsight. At the time HOMM1 came out, it was great fun, and I wouldn't have eventually gotten HOMM2 and HOMM3 if I hadn't played the daylights out of HOMM1 and had a darned good time doing it.

HoMM 1 doesn't become worthless just because HoMM 2 is clearly better.

However, there is a question of pricing adjustment.

If you had 10$ and had to choose between buying HoMM 1 or HoMM 2 (assuming you had neither), which one would you buy? I'm pretty sure that having played both games, a huge percentage of players (over 99%) would get HoMM 2.

Hence, HoMM 1 is not priced appropriately compared to HoMM 2.

Maybe if HoMM 1 was, say, 6$, then some people would get HoMM 1 instead of HoMM 2, because while they would consider HoMM 2 better, they wouldn't consider it better enough to warrant the 4$ price difference. And if not, then HoMM 1 might still be overpriced.

Personally, I got HoMM 1, because:

a) It was 50% off

b) It had some songs that I wanted in the soundtrack

There is no way in hell that I would have bought it at the full 10$ price knowing that there is only 1 working song in the soundtrack (even if that song is awesome).