Find a hacker-designer, even if it means expanding from 2 to 3 cofounders. Or become that hacker-designer.
Good design and flow is critical, especially for consumers apps. I'd say that 2 of 3 of our founders consider design as one of our core competencies and I think its made a huge difference.
But even if its not a core competency, make it one of yours! Our 1 non-designer cofounder learned about and talked to other startups about design, and ended up coming up with our biggest design improvement to date - removing the whole "website" from the frontpage. If you go to Anywhere.FM, you'll notice we don't take you to a "website" and this change reduced our bouncerate by 50% (compared to the Alpha release). This certainly trumps most technical feats we've accomplished to date.
Finally, its good to have multiple opinions (but not get locked up in minor details), so that the UI targets a wide audience - not just the audience the designers are most in tune with. Its easy to target only yourself, and we probably still suffer from that today.
Excellent question! The most precise case to follow is the MyPlay case. In fact, the ex-ceo of MP3.com created a startup, similar to ours, that is protected under the results of the MyPlay case, which showed that digital locker services are kosher. In fact a quick google search shows you this space has many competitors :).
Sorry to hear about your upload troubles. We've heard that the Linux Flash Player isn't quite prime for handling uploads, and we've gotten a small handful of people who have trouble uploading particular files in any OS. Hope to fix this soon!
Thanks for all your valuable feedback and comments, it is really motivating :).
Now some advice I wish I followed... sleep a LONG time the day before you launch ;).