I think that attempting to categorize design and function as more or less important than one another is not a particularly productive endeavor. A more fruitful question, I believe, is when is one more appropriate to prioritize than the other. It is also true that creating one product might entail making a decision between privileging design or function literally hundreds of times.
From a corporate standpoint, the answer to the question of which virtue is more important is simple: which trait will be more equipped to set this product apart from other products on the market? As a brand or product manager, I would be willing to make a sacrifice in one department if I was able to point to something that is provided to a consumer that they cannot get anywhere else. And while that may seem like a bias in favor of function, it isn’t. Design absolutely provides customers with benefits. Some make a product more enjoyable to use because it is beautiful to look at, and some provide cultural or interpersonal benefits; a beautiful product makes people jealous and can signify your membership or participation in a cultural elite.
As a consumer, design has definitely influenced purchases. When American Life was released, there was a deluxe edition which included nothing more than more elaborate packaging. No additional music. Just some post-cards and more beautiful artwork. But I bought it. I was drawn to what was attractive, not just what would get me the music, which is what I was, ostensibly, buying.