Is it alright to cycle through day/night? It is inevitable. It is neither good, nor bad.
The human brain is like a committee, with millions of warring factions. Sometimes the positive bunch are running the show, and sometimes the negative bunch are shouting louder.
And, of course, taking an honest assessment of your idea is important. You've gotta listen to both sides and try to ascertain which one is correct. But, the "there's tons of X" is a nonsensical argument. There are niches within any large software market that are being served poorly. There are opportunities to change the game in any large market, and those opportunities come around every few years...you just position yourself to take advantage of them and be the company that changes the landscape.
Google changed the landscape rather than accept that search was an also-ran idea. It took the Japanese until the late 70's to figure out how to change the auto industry landscape, but they did, and now the big three Japanese auto makers rule the market, with Toyota (the most forward thinking and efficient mover among them) the leader.