The current wave in startups is now to develop another social networking application, to see who can build the bigger network. Hi-5, Friendster, Facebook, MySpace, etc.
This reminds me of the portal wars, back in the first Internet wave, the mentality then was to see who could build the biggest and best portal (which was won by Yahoo! and MSN). Then Google sneaked up on everyone and just built a better search engine.
The herd mentality is now into social networking, I think that that is a signal not to follow the crowd. There will be a clear winner, but I think that the winner is already in the market, and its just a battle of attrition now.
I think the next big thing would be something simple and overlooked that no one will expect it.