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I don't full grasp the concept but it seems to me that making users set up their computer to act like some kind of peer is a great barrier to entry for everyday folks.

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From the Kickstarter page:

After we open source our source code, we hope to also provide a paid turnkey hosted service in the vein of Wordpress.com to make it easy for people who want to use Diaspora, but don’t want to deal with the fuss of setting it up.

If the only way for the average person to use the service is to pay for it, that's going to be a very tough hill to climb.

Unless someone else hosts an ad-supported version that turns out to be viable. But I agree that their business model needs work.

If its kept minimalistic, along the lines of Craigslist, they will be just fine.

They won't have to do this. Most will probably go with a provider such as Google, MSN, or Yahoo!. The "cool kids" will install a Wordpress plugin or set up their own.

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