Is this a good space to compete in? There are zillions of sites like it, it's really easy to duplicate, and hard to make money off of? Nevertheless, best of luck to you.
I hear Omni has a good business going, as well.
Simplenote, Evernote, & friends seem to be doing alright.
There's always room for something better.
Most importantly, when your life changes, change systems. I constantly switch between different combinations of apps to keep my life in order based on what's going on in my life at the time.
There may exist zillions of sites, but that in and of itself doesn't matter. If they can build a better product that can draw a large enough audience, that's important. I have personally looked around for tools like this, but haven't found anything that really kicks ass. Playing with their tool makes me optimistic -- they may be on to something.
I don't think they have to worry much about duplication. Building the product isn't the hard part, getting users is. Not sure if they'll be successful here, but if they fail it'll probably not be because of a clone.
Good point with the money, that almost certainly be tough. However if their product is useful enough and enough people use it they'll have an opportunity at making serious money.
My app Noodles (see: makeramen.com) was just another todo list on the Android market, and somehow -to my surprise- gained some very solid traction.
The amazing thing about the productivity software space is that everyone wants their app to do something different. It's also much more of a designer's space. I've seen countless apps that have all the "features," but the actual interface and interaction is so awkward you end up spending more time fighting the system than using it.
As many people have noted about 37signals, people realize the benefits of software like this almost immediately, and will easily spend money on it. Contrast that with other social sites where people are just not culturally incline to pay for services that connect you with friends. But you start talking about productivity, and helping people work faster, better, and more efficiently, and they see benefits immediately, which means they'll reach for their wallets immediately as well.