the web based invoicing market is extremely crowded and very hard to complete against the likes of freshbooks.com
though i went the opposite route to you and its working $ for me
created the open source app http://simpleinvoices.org first, got large user based, then offered premium hosting at http://smarterinvoices.com
I think the difficulty with invoicing is that it is so heavily tied to everything else one might try to do in a business, from tracking inventory to CRM to financial accounting. This doesn't mean that one can't do this, but the interconnections seem to be key.
re interconnections
* depending on the target market
* the people who need integration already do some form of accounting already - and a 'full stack' accounting solution like http://xero.com is more appropriate for this market
* simpleinvoices market is people with no accounting system or desire for debit/credit stuff so we have make no attempts to make quickbooks, etc. integration work