I still see plenty of issues with overlapping .co and .com domains… If the main reason you're considering .co is that the .com is taken… Well, either have a targeted/niche service where people will either find you via another means (mobile app, facebook, backlink, search, etc), OR think up a better name and grab the .com.
The idea that all the good names are taken is propagated primarily by people with no imagination. 😉 Seriously, though, any benefit you would get from the shorter/concise name is basically killed by .com/.co confusion, it's very similar to grabbing the .net when the .com is taken – you're just instantly losing traffic.
Worry a little less on the perfect domain name, and more on making a product SO GOOD that you get funded well enough to buy the .com you wanted in the first place.
Is it a good or bad idea to use a .co domain to launch a startup?
deano.com 