I still don't like that specific idea, but I regret trying to defend our idea during the interview. I think they test the teams by suggesting different ideas to see how we react to new things. The more open you are to new ideas, the better. Just like Reddit, the team came to Y-combinator with totally different idea.
So I think it's very important to be open and positive to th ideas bring up during the interview - because if they like you (but not your idea), you can very well be working on theirs instead.
I wonder if they ever flip out "bad" ideas to see if they're dealing with a "yes man". Doesn't seem to be their style, but it's not like I really know them well.