I'm no fan of excessive government regulation, but I can see where this is fraught with potential problems. For one thing, auto insurance companies aren't going to look too kindly on their clients running a taxi-cab service with their private autos. And I've always questioned the safety/security aspect of this, too.
P.S. — The ideal application is if you need to go from Point A to Point B, you send a request through your iPhone, and you get picked up by someone who is already driving in the area of Point A and is destined for a place where they have to drive past Point B.