Good Concept :)
Just work a little harder on the execution.
Now, here are some suggestions to make this good idea great. :)
1) Create a time signature box-- In other words, how many beats in the grid. Like for instance, if the user wanted 4 beats per bold grid marking (or measure) then the user should be able to select it from a list.
Common time signatures are:
4/4: 4 beats per grid marking.
3/4: 3 beats per grid marking.
2/4: 2 beats per grid marking
There are also #/8 time signatures, which counts the 8th note instead of the quarter not, but I am not sure it is possible with this type of interface.
2) Also, instead of playback settings, what about tempo settings? Since the user wants total control over what their song sounds like, why not have the user have total control over how fast the song is, either? For instance, if the user wants a tempo of 60 bpm (beats per minute), that would be the second hand on a clock.
Common tempos are:
Adagio- 70-80 bpm
Moderato- 80-100 bpm
Allegro- 110-140 bpm
Presto-140 bpm and on...
3) I actually liked some of the sampling in the BeatBox. I know from experience that sampling can be far harder than actually writing the song, so you did a good job. The only problem I found was on instruments that can have more than one note, like the string. People like to hear different pitches in songs, so change the guitar so there are different notes and varieties.
4) And the finale! Make the interface a little more attractive looking to users. The pretty, the better. ;)
Good job! I can't wait to see your first version soon! ^_^
~Smartpoetic