The project also depends on MongoDB, which is also AGPL licensed, which raises the question of if paid hosting of a diaspora instance is 'commercial' and if it requires a MongoDB license from 10gen, I would think that it does.
They should BSD/MIT license their own code, and build more storage options outside of MongoDB. I am surprised that donors didn't insist on a license as part of the kickstart funding.
I assume the 10gen commercial license allows you avoid having to provide source code for your product to your users. (but the mongodb website isn't clear about that).
I would like to make it clear that users of MongoDB don't need to opensource their product, only their changes (if any) to the MongoDB server itself. The commercial license is mostly for companies that have strict (if misguided) "no AGPL" policies. Most users do not need it.
AFAIK AGPL does not stop anyone from making money. It just stops taking others work as the base and building closed enhancements on top of it.
I'm all for free software and all that, and GPL is great for infrastructure software like web servers and databases, but I think a BSD license would probably work better overall for Diaspora adoption and for encouraging more serious developers to work on it.