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Is The Market Becoming Saturated?

It's clear that there are a plethora of web 2.0 tools. Something that I wonder about it, is if there is such a thing as too much and how do people decide which tool truly is the best one to use. Framapad is a collaborative writing tool and so is google docs. What makes one better than the other and are they truly different? Also, cluster did remind me of instagram and facebook. I understand that cluster is more private, but instagram and facebook can be private as well. I also view LinkedIn as a professional version of facebook. I just think it's interesting to think about all the types of tools out there and how there is a significant amount of overlap between them.

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