Cool concept, marking-up documents is big business. Legal depts we negotiated licenses with would
always do it by emailing a Word doc, with its diff/review feature that looks very nice, and comments. My book publisher also used it for reviewer feedback.
Unsolicited feedback: It looks beautiful!
It's much slower than google gview and scribd (but they don't allow annotations, so it's apples/oranges... but still).
Why don't you pre-scan the demo document? I know it's cheating, but it gives a better first impression (and, to me, it would feel reasonable if my own document took a few moments longer to process than the demo. Best foot forward etc).
I wish you'd have an "upload doc" textfield prominently on the demo page - without it, I assumed you had to open an account; it was just luck that I happened to read the FAQ saying that you could. But it didn't say how, so I'm scratching my head. Luckily, I tried going to the front page, there it was. You're making me think too much, just to get started, which is an easy place to lose someone: I think you're losing trials by not having it on the demo page either - that's the natural place for a "load" document.
Also, Your style of upload file/URL form is popular, but I really think there must be a better way! Perhaps one textfield, with two buttons (upload and file browse). You enter your doc, file or web, and the uploader sorts it out; the file browser is just a convenience. Maybe also have a google search, if people don't have the URL immediately on hand (must be a common case).