Seemed to actually function on an iPad. Nice work. The competitive positioning to Balsamiq is clear and well placed. How will you generate revenue if its free?
Edit: Ipad works to some degree, but the app is definitely not yet optimized for a great touch experience. We're also working hard on fixing that.
Generally, the use case for mock ups at least where I work (we use Balsamiq) is that everyone at least has a laptop.
I'd work on getting parity with Balsamiq, and focus on doing other things better. We use Balsamiq at work, and generally we have a lot of assets already in it (I know you are working on importing), but you'll need to unentrench their current user base.
Going on the freemium model will disrupt a lot of their income too. Right now balsamiq requires that you pay to use it even if you are not collaborating, but I'm sure you already knew that.