Never saw this thread before.
The application is interesting, but it looks really limited. The chords that are used in the demos I\'ve seen thus far are so simple, a novice could learn them on a real guitar in a few minutes. I don\'t see what the advantage is to playing them on a fake DS guitar.
They should allow you to build up chord progressions first, then have the DS play back a recording of you performing your chords, while you add a lead melody over the top. Switch the chord buttons to notes on a scale, and it would work reasonably well. Add some more samples like a bass guitar, keyboards, and percussion, and you could actually build up some interesting songs.
With the current product, it appears all you can do is strum chords.