There seems to be a lot of misunderstanding about the city of Cambridge, it's surroundings and the reasoning behind the Guided Busway.
1. The main employment centre to which people wish to go is Cambridge Science Park/Business Park. A large part of the reason the Busway was built was to move the existing bus service (Go Whippet's 1 and 1A) off the obscenely congested A14. It can get backed up for a large number of junctions, just from people trying to get off for the Science Park. This is largely because the 3 exits off the A14 for Cambridge are
a) A roundabout onto the 2 lane Histon Road, with a single lane slip road for the Cambridge direction.
b) A roundabout onto 3 lanes into Cambridge Science Park with a single lane slip road for the Cambridge direction
c) A single lane flat junction onto Horningsea Road.
With everyone under the sun trying especially hard to get off at b).
Without closing that junction and completely re-make the access into Cambridge, especially the Science Park, they needed an alternative to sending the main public transport service from a series of Cambridge commuter towns down the A14. The main traffic was along the St Ives corridor and there was a convenient rail alignment there.
When asking the question "does everyone from those towns want to go to Cambridge", the answer is yes. Those who most benefit from the Busway are commuters to the science park. The bus then extends into Central Cambridge, mostly for the benefits of students and tourists, and to not denigrate what was the previous 1/1A service that provided a reasonably rapid*** link to the science park from Cambridge city centre (otherwise, City -> Science Park commuters would have to make do with the hourly 9 or very slow 2 - via Chesterton and Mill Road).
A heavy rail link into Cambridge Railway station doesn't maintain capacity City - Science Park, which the busway does (even if it still has to travel along congested Cambridge roads). One could argue that a new bus route would have done the trick, but given the fact that the cost of the busway was perceived as small, this appeared to be a 2 birds, 1 stone situation.
The ideal would be a crayonista dream, with a light rail service going into a Cambridge Underground Metro, but that would have been way too expensive. I certainly can see passenger uptake upon opening of Cambridge North railway station, as it will become much easier for passengers along that corridor to get to central Cambridge, via the station (which is about 15mins from the city centre).
I certainly agree that there were planning/thought process issues with the busway, but compared to more expensive alternatives, it provides a very useful service.
***Milton Road traffic notwithstanding