The concept itself is trivial and not exactly new. It has been around for ages in a form of private areas on BBS'es (remember those?). It is implementing the concept in a way that compares to Facebook - that's where the challenge is.
Also, realistically speaking, the chances of making people switch away from Facebook are really low, even if Facebook shows an astounding lack of foresight and does not roll out a circles-like paradigm really soon. People are lazy and Facebook ties are sticky. Those who are not on Facebook are not there for privacy reasons, so they aren't likely to flock to your service either.
So it all depends what you want to get out of the project. In any case, if you can and decide to continue, it would be a great learning experience on all fronts - from technical to design to marketing - I can guarantee it :)
I tried working on a similar idea a couple years ago, but dropped it because I couldn't find enough of a draw to make even myself switch over from Facebook to my network, let alone other people. I wish the OP best of luck in executing this idea better than anybody else has managed to yet.
Is part of your plan to allow people to continue to use their existing services/graph, and trying to slowly move them more into your network?