There's a guy named Don Norman whose books tend to be required reading for students in industrial design or human-computer interaction. I'd say the best known is The Design of Everyday Things, followed by Emotional Design: Why we love (or hate) everyday things. They're probably mostly full of semi-insightful bullshit - since they're read by ID and HCI folks - but I mention them because I find the second title to be sort of an interesting thought-provoker.
Most of my ideas are geared toward software, as I've found myself working increasingly with UI lately. The importance behind the concept of ''emotional'' design, to me, is realizing that users spend a lot less time using what you built than you spent building it. You've spent the last several months in development, adding a lot of new features. If your users were to take a long time, sit down, and analyze the product, they would realize that you've done a lot of great stuff, and that one particular usability concern is a very small problem.
But when we're being "users", which is for most of our lives, we're not taking our time to think rationally. We're having series of brief interactions with a lot of products, so it stands to reason that our reactions are going to be more emotional than rational. And in the end, these are the impulses on which consumers act. An item which bothers you does have a negative impact on your life, so this frequently makes sense. Sometimes, however, emotional reactions are unfortunate, because legitimately great developments either get drowned out in a sea of flashy devices with better interfaces, or get rejected because of some small design flaw.
Here's a good example of some software I personally hate: Firefox and Thunderbird. That's right, you heard it here first, folks. My emotional distaste toward Mozilla's flagship products is due to their shoddy performance under poor networking conditions. When I'm dealing with a bad Internet connection, I'm already irritated - so if software's goal is to make me happy (if its ultimate aim is to be widely adopted), now would be its time to shine. Or at least, it shouldn't do anything more to compound my anger.
I find myself cursing at Thunderbird because it feels a desperate need to alert me every time it loses contact with a mail server. It is set up with several accounts, so sometimes one of them (I'm looking at you, Gmail) may be inaccessible. It checks for new messages every five minutes, and pops up an "alert" box if there's trouble. Somehow this event was so important that I'm being forced to acknowledge it (didn't we learn by the end of the 90s that modal dialogs are rarely appropriate?).
I don't have any direct contact with project sponsors where I work, but I heard second-hand a comment from someone who said "I hate the new ######## module" (referring to something built by a co-op student last semester, which I've been working to clean up). It's the first of many UI components in our webapp which we're reforming with some intense javascript. The new code is great, and the new UI is quite spiffy. For the most part, it's an all-around better product. But for some of these guys using older machines, it runs too slowly - inspiring hatred.
I'm not sure what my conclusion is from all of this. I guess the main bullet point is that we frequently need to pay more attention to the seemingly small details that users dislike the most.