You answered your own question above, and also identified why app.net won't interest you. If you're okay with ads, then I think you'd get zero utility from app.net
Are ads in and of themselves really a huge problem? I don't find myself often annoyed by them. Now if there were a systemic change to the service because you didn't have to alter the experience for users to generate ad revenue, then I begin to understand. However if this is the idea, then in what ways the service would be different is exactly what I'm trying to figure out.
Remember, there are two sides to the coin "we offer a better experience without the ads" method. First of all you are going to get a smaller user base. So how much are you going to charge? $5/month? $10/month? You would need to get a pretty massive user base to be able to pay the overhead and attract top engineering talent, so in the end I'm not sure you'd be a whole lot better off.
A lot of people don't want to be the product and believe when a company focuses on them as a customer rather than them as eyeballs to be sold to advertisers, who are the customer, then a better service is the outcome for the users of the service.
With app.net the user is the customer. With Facebook and Twitter, the user is the product. With App.Net user interests and service provider interests are aligned. The provider wants the service to be better for the users.
With Facebook and Twitter and other ad supported products the users who value their privacy have intentions which are constantly at odds with the service provider whose intention is to continually open up details about the individuals so that those details can be used to improve ad success rates and profitability.
Where's the evidence that suggests that millions of people care about this distinction enough to pay for it?
Where's the evidence that suggests millions of people have to join?
Personally, I use Twitter mostly to talk to people in the fields I work in, namely hacking and journalism. I don't see how either of those communities will move to App.net wholesale. If you want me to pay money just to have a conversation with you, I'm probably going to decide to just not have the conversation.
Ads on Facebook and Twitter don't bother me. I won't be paying to get rid of them. I don't even use AdBlock to get rid of them for free (partially because I think it's unethical to do).
My first post on Twitter was "trying to figure out WTF Twitter is". I subsequently didn't post for six months. I wouldn't judge the platform on what's posted in the first 30 days of existence. As for sustainability, $500k in revenue is more than Twitter had for years.