I agree that they may not have hit on the right idea for their skills yet (overhear.us is fun as hell to use and eats time like nothing else I've ever used, but it doesn't seem to be getting traction, so far), but I have no doubt they will build something great. They may end up going back to the drawing board (maybe even a few times) before doing it...but you'll hear about them again. They're still young...plenty of time to make a few mistakes before hitting on something great.

YC is a very early stage investor. They bet on people more than ideas. I believe betting on Paul and Evan was a well-placed bet, even if Socialmoth and Overhear.us never explode into popularity.