As I said "tut, tut"

"They have no useful cargo capacity and cannot reach orbit."

True, but space isn't orbit.
If all you want is to spend is 10 minutes in space, sub orbital is "better" than orbit.

"Suborbital hops are easy - the re-entry penalty is quite light and it is easy to re-use such a vehicle - as you point out, it is merely a specialised airplane."

Suborbital are easier, yes. Not necessarily fair to say easy.
NASA hasn't done this. NASA probably couldn't do it.
But if nothing else, it is fair to say, NASA hasn't been interested enough in doing it.
But thousands, perhaps tens of thousand of people want to do it, and will pay a fair chunk of change to do it.

But what I not mentioning is the most important potential aspect. Not just joyrides straight up, but "joyrides" going horizontally.
Now this is something that NASA was interested in doing- not just NASA but also Dept of Defense. They spent somewhere around 40 billion dollars, not doing this.
Example:
"NASA has set Saturday, March 27, for the flight of its experimental X-43A hypersonic research aircraft. The unpiloted 12-foot-long vehicle, part aircraft and part spacecraft, will be dropped from the wing of a modified B-52 aircraft, boosted to nearly 100,000 feet altitude by a booster rocket and released over the Pacific Ocean to briefly fly under its own power at seven times the speed of sound, almost 5,000 mph.
...
The $250 million program began with conceptual design and scramjet engine wind tunnel work in 1996. "

X43A

"The total development costs for HyperSoar have been estimated at US$10bn, which is roughly the same as the cost to develop the Boeing 777.However, HyperSoar is still many years from fruition and hypersonic technology is still very much in its infancy. Many of the technologies essential for such an aircraft, like ‘Scramjet’ engines and special heat-resistant surfaces are years from development. Then they would still have to be tested and proven. It is therefore doubtful whether HyperSoar could be completed by the USAF’s anticipated deployment date for a new bomber of 2013."
http://www.global-defence.com/2002/air-bombers.html

Hmm, I couldn't find the 40 billion number. But it's a black project, so considering cost of these things, probably 40 billion isn't off by much- if not, a low end cost.
Perhaps, Gary mentioned it cost this much.

Now, what is Branson doing? And at no govt cost:

“Richard Branson: - I don’t think that people will travel to space in the same way they travel to Thailand. Having said that I think that the technology that we are developing at Virgin Galactic for space travels may well enable you to go to Thailand from Scandinavia in half an hour by popping you out of the Earth’s atmosphere and then straight back again at an affordable price. I think that in your lifetime that is a possibility.”
says-8-year

Launch to LEO is an entirely different issue...

Different, but certainly not unrelated, I would say it's as critical to space as ISS- which could quite an understatement.