The first time I saw Riya.com, I was impressed by its technology and the potential (for a Google acquisition). The only business case I could see was Google acquiring them to index their image database. Imagine you searching for images of Aishwarya Rai and if the image I have here was named IMG_841.jpg, a search engine would not have picked it up. Since it is named AishwaryaRai_Sketch.jpg, it will get picked up. An image should either be named or tagged appropriately in order for search engines to pick it up. What Riya promises is that even if my file was named IMG_841.jpg, it will also be tagged as a picture of Aishwarya Rai as it does visual pattern matching of the image and not just the file name. Wow. That is pretty cool stuff. Iff, it works all the time.
The problem Riya is facing is an interesting one. You have a solution to an unknown problem. You need to define a problem that is compelling for the audience to invest in you. It has to be timed right, and priced right.
What a sweet problem to have. They have the technological solution, and are searching for an appropriate problem to solve.