Send them the photo, and then give them the option to buy a print / hat / sticker / skin / etc.
2) you can use display ads from other networks in your email news letter if you want to try that, but it's a pretty abstracted revenue stream
3) sponsorships are much better than ads on low traffic properties.. I have luck selling ads at close to $1k / cpm equivalent for a blog I ran.
4) joint ventures -- run the app for free and then once a week / month / whenever promote a specific offer to your list.
5) I'd be focused on getting users first and probably the only action I'd want them to take is to recommend the service to friends.. Otherwise, you are trying to reinvest ad revenue from users to recruit more users - it seems that focusing on getting your viral coefficient above 1.0 would be a better use of focusing the actions of your users since the users are the best evangelists... Maybe even just having a feature for them to share the photo on Facebook, etc and include a link back.. Better yet, have an automatic option to autopost the throw back photo to their time time.