I'll share with you one insight we had from our brainstorming sessions: we thought it would be a good idea to make the product a desktop email client that runs on startup rather than a web page (tagline: "Outlook for the elderly. Except it doesn't suck like Outlook."). I just remember how difficult it was for my father to learn how to find the browser, open the browser, go to gmail, remember his password, etc. And yet for many users, email is 90%+ of what they use their computer for. There's no reason it should be complicated (or use small fonts!).
However, making a website probably entails less up-front investment and allows you to test the market. It's a great idea, and I wish more people would focus on this underserved market.
Great idea for a product!
Grandpa thinks it's a desktop app and has a single icon to click on, but from a development and maintenance perspective you get all the benefits of the web.
My one suggestion would be to do some work on the interface of your website itself. Given what you've done on the application interface I'm sure you guys are capable of better. (Had this link not been from HN I most certainly would not have given this product the time of day, based on the website.)
I did want to point out that my own grandparents are 75-ish, and use gmail just fine, and have a blog that they update regularly.
So I'm not sure if this market will be increasing, or decreasing. Over a long enough time frame, I think it probably will be decreasing, as more tech-savvy users get older.
Also, my father's generation is more used to paying for things of value compared to my generation. It could be a good market.
The market for older people who need a different mail client because they don't know how to use email is probably on the decline. But, the market for older people who need a different mail client because their eyes are going bad or they can't type well anymore is probably on the rise.
One other comment is that PawPawMail sounds like you are marketing to grandfathers. In my limited experience, the grandmothers (and aunts, moms, daughters) send far more email.
Do all elderly people have Flash?