Not at all. I've heard that comment plenty.
My take on it:
* Social News sites are much better than forums for specific topics. How many forums are there?
* I'm planning on avoiding the geek news demographic and aiming at other markets: financial news, real estate news, gadgets, crafting (Did you know that crafting is a 30 Billion dollar a year industry in the US? ), non-English sites, etc...
* There's a reason that gaming Digg's front page is a big money business. Votes on Digg sell for $1-2 a piece, and it costs $2-500 to get on the front page, or at least it did last year when I looked into it. That tells me that traffic suppliers are in demand.
* If you're outside of the Tech News echo chamber no one has heard of sites like Digg, Reddit, Hacker News, Slashdot, etc... It's a meme that hasn't taken off with the general public yet, even though nerds are bored to death with it. I think there's still a lot of room to grow.