Also, flickr's upload limit on the free plan wouldn't allow you if you have a high megapixel camera.
The only reason that I personally was able to complete my 365 was because I had options for uploading my photos direct to my set from my phone (I tried various paid apps until I found one I was mostly happy with.) If I had to sync my photos with my computer first then it never would have gotten done. Obviously on the one hand it would have been great to have 365 high quality photos from my DSLR, but the convenience of the iPhone was the only way I could keep up some days. In other words, an app or a simple way to e-mail photos to the program would be a must for me. And I probably spent $50 specifically for my 365 between Flickr Pro membership and various apps I tried, so I don't see the $11 as off-putting in itself at all.
If you're curious about my 365, I took a photo a day of my Toy Story Toys: http://www.flickr.com/dafalcon/ - the set is on the right side. And I just started 365 days of my newborn baby girl ... Give me good reason to switch from Flickr and I just might!
We're planning on allowing users to purchase a book of their photos at the end of the project.
We're also working on adding email-to-365, which would allow you to upload via your phone and other devices since e-mail is pretty widespread. We're also working in webcam integration so you can take a picture from the website itself.
One thing we allow is backlogging. Right now it's basic, but we're planning to implement a verification feature so that pictures that don't match the dates get flagged. They'd still be in the project, but they'd be marked as late. We were thinking about doing this by reading the images EXIF data.
The way it stands is you're offering a pretty page for photos at $11 that doesn't target any real customer niche and does what a Tumblr blog paired with a Flickr account would do for free in a more flexible way.
It's funny because there are so many people on HN and Reddit, for example, who don't capitalize on creating small niche services because there's already a Flickr, or already a Youtube and whathaveyou.
So I think you've done a good job here.
I think you could probably market $10 better. Remove the struck out $20 and just prominently and proudly display the $10.
As a risky marketing move, how about refunding all users who paid $20 the difference? What a great way to get them talking about you on Twitter, Facebook, etc. when you deposit their account with $10. It's a nice surprise.
Just an idea. Good luck.