Personally I'm not sure what I think, but your question is the exact reason why so many newspapers proclaim this as a "Tech Bubble" -- too many companies making similar projects. The market isn't running out of room perhaps, just it needs to shake off the incompetent or repetitive services in order to keep moving.

The other thing to keep in mind is that at one point or another, most startups end up being unsuccessful. Very few actually end up to be profitable enough for an entrepreneur to retire on, which is usually the goal of a Web 2.0 entrepreneur.