This new tool would be great for anybody who doesn't know HTML -- but for those who do it can be quite frustrating. One addition that would be nice is an advanced mode which allows some HTML editing to be done or FTP access to upload your own HTML files for more control.
The goal of this project is to give users the tools to create relatively static pages rather than ones that are frequently updated -- like blogger. There are people who could use a service like this but I think it's still a bit too complicated and will not pass the "Mom" test. If it does actually take off, the next logical step would be to offer domain registration and DNS services so people can hook up a domain to their brand new webpage.
On second glance, it looks as though you are able to upload files to the service -- including HTML files. Even so, it would still be nice to see FTP access in the future.