Worst comes to worst they can just merge with one of the already-existing distributed social network projects out there and rebrand it to Diaspora:

http://onesocialweb.org/ http://appleseedproject.org/

I hope this isn't the case, but you may be right. Too much money/fame at too early a stage in the project might not be such a good thing.

I think it's going to fail, in the sense that when people who have donated to it see the results they're going to be confused and disappointed. Which is fairly significant fail, but hopefully there will be some useful by-products, as it's supposedly open source and based around open standards.