It doesn't allow collaboration but it is entirely focused on wire framing (unlike GDrawings, OmniGraffle and Visio). It provides a great experience.
For everything else, I use OmniGraffle.
Paper and pen is good too, but it makes me think about details like:
* Whether a line is straight
* Whether my writing is legible
* Whether my writing fits in the container
etc. I don't have to think about these when using a drawing app. Also I can send my render to an XML slicing service. On the other hand, connections are much easier to draw on paper.
People in this thread have been saying pen and paper, but it's (obviously) a pain to scan a bunch of pen/paper sheets for search later or remote collaboration.
FWIW, a new solution I've been using with some success just over the past few days is Penultimate, a really simple/nice IPad notebook app -- as distinct from a sketching app.
http://ipad.maccreate.com/2010/04/16/penultimate-ipad-app/
Use that with a $15 Pogo Sketch (you can get it in the Apple Store) and a $11 pair of fingerless cloth gloves from Hot Topic (http://www.hottopic.com/hottopic/Accessories/GlovesArmwarmer...)
The gloves are really handy as they turn off palm detection, so you can rest your hand on the Ipad surface while you use the stylus, just like a normal sheet of paper.
Most annoyingly, the fact that you can't alt+drag or alt+nudge (arrow keys) to duplicate an object. For me that's the single biggest time-saver when doing wireframes and mockups. Otherwise you spend a lot of time repositioning and realigning pasted objects.
Most desktop apps get it right. I've yet to find a web-based app that does.
I'm going to check this out.
I'm also curious how their flowchart handing is. I've still never found a decent flowcharting program made for coders. It was getting to the point where I was actually considering making one to fill my need...
On the other hand, how about http://www.gomockingbird.com?
I believe I read about Balsamiq on HN a while ago; it must be tough for a small company to operate in an area that intersects with areas google might be(come) active in.
My point is, even if you're now competing with a team from Google, you're not over and out yet.
That's getting to be more and more of us.
