You're also stuck with the chicken egg problem which is hard to solve: You have no users so you're not useful. I'm familiar with how tough the geo chicken-egg problem is since I built a foursquare app 4 years before foursquare came along and it also didn't fly because of the wide distribution of users. It's still online here: http://geojoey.com/
My advice to you is to walk away and chalk it up to a learning experience. Then go and build a paid application that solves a problem people have and that isn't being solved by anyone else. Make sure the problem you're solving is worth money to users, that they have money to spend and that they're the type of people who spend it. Usually this means the people who use your app get some kind of direct or indirect ROI from using it. Also try to do it in a space that is under exploited. The app store is massively crowded and very noisy.
Don't write a social app. Don't make it free. Don't ever plan to get funding. Don't give away shares in your business to anyone. Don't feel compelled to take on a co-founder or partner. Don't use bleeding edge tech for your business. Don't bother with incubators. Don't surround yourself with other entrepreneurs all day long. Don't think you need constant input from advisors or mentors. Do your own thing, be an individual, create real value. Find a problem that you yourself have and that you would be prepared to pay for and don't accidentally persuade yourself that you have a fictitious problem - find a real one that no one else is solving that that is costing you money until it is solved.
Money talks. Build an app that makes cash and it will change your life. Sitting on a balcony drinking a mochito at 5pm as your settlement email arrives telling you you've settled $2k today because people paid for software you wrote is a feeling few developers experience in their lifetimes and there's nothing like it.
"Then go and build a paid application that solves a problem people have and that isn't being solved by anyone else."
Sometimes that's not always the best approach. If no one else is solving it, it may be that the people with the problem won't pay, hence no providers. If there's solutions out there, it does validate a market/problem/idea.
The trap I see some people fall in to is what you just advised - trying to come up with something "totally new/unique", when often there's no demand. And when they see demand for X, they say "oh, XYZ is already solving that". The trick is determining how well they're solving it, finding customers they won't/can't serve, and going after that.
But yeah, don't make a social app, don't give away free stuff, etc - all your "don't"s - great list. And yeah, making money is a good feeling. It also gives you a much stronger position to explore new ideas from, rather than from a position of "oh crap there's only 4 boxes of macaroni left and I'm late on my rent".
EDIT: the 'great advice' really was meant to be 'great advice', not sarcastically spoken. I think pretty much everything in that post was great, except for the one line I called out. :)
Regarding the failure of this launch, this should not have come as a surprise, the marketing solution to this should've been in your business plan from day one. And maybe, if you _would_ have surrounded yourself with founders maybe one of them had actually paid attention to the stories at HN and warned you about the launching deficiencies in your plan.
I think it's too early to stop now, even as it feels you've lost your only chance. You build a product people actually want and you've only tried launching it once thus far.