That's not because the users of this site are web designers. Mostly they're developers. It was because the design of the site was so bad that most visitors got held up there. This also explains the low sign-up rate, which you explain as a property of the audience. I think it is more likely a property of the site.
Also, the main page has an it's/its mistake on it which makes it look unready.
It's not surprising that the benefit didn't pop out.
The ycnews crowd may not be your target audience. Perhaps they they are too busy hacking their own stuff to bother researching other startups :)
Extremely fast-registering sites (like Hacker News, for example) have spoiled me. ;)
I think the only valid response to that is "WTF?"
Your site may not be ready, but you guys sure seem like you're on the ball. Thank you and good luck!