Y Combinator doesn't accept porn sites? Maybe Paul should have specified this in the application, so I wouldn't have wasted my time making a MiniDV-casette sized demo with 13 hot female co-founders. "Hey, I'm starting up a company. Every additional founder gets $5,000. But, I need to make a demo. Do you have 60 minutes?"
I have a feeling if YC started funding p0rn startups they'd wipe out a huge swath of the crappy sites that exist (and make tens of millions). At least people wouldn't question the business models of those companies ;-)