You will need PHP5 (including the OpenID, gd and curl libraries) plus MySQL 5 or later. Apache 2 or later, or lighttpd are supported as web servers.
I guess the project is still in the very early stages, so it's probably a bit unfair to criticise them for that at the moment. Hopefully someone (or many people) will offer hosted versions.
I think this is the thing. I also like the idea of techy types (like us) being able to host our own servers for small groups of our less techy friends.
We're going to make this Wordpress-easy to install, but also have a vast array of reputable service providers offering both gratis and low-cost domain+social+identity packages.
I guess the trick will be to get people to view their social network as more like email (decentralised, everyone has accounts with different providers, etc) and less like facebook/twitter/etc (centralised). At the moment people see the network and the host all mashed together as one thing (I go to facebook.com for facebook). Maybe there are some parallels here with the early days of AOL...