Do people like watching cats because of neoteny? I doubt it, because adult cats don’t look at all like babies.
But then why do we have this odd fascination with every ordinary action of a cat and treating them as instances of a Platonic Cat?
I speculate that there may be an evolutionary psychology reason: cats in Africa prey on primates to a degree I suspect few people appreciate, and this seems to have been true for millions of years, making them our apex predator.
So perhaps we are still slightly hardwired to closely observe cats, in a way we aren’t for most other potential pets—cats still remember when they ate us, and so do we. This accounts for the indefinable appeal of cats: they are paradoxically both pleasant and unpleasant, like horror movies.