Steve, you are not alone in your situation. Take some comfort in knowing this is what many people go through when trying to come up with a site.
But what you need to realize is that you can't be afraid to fail. Unless it's money you're concerned about losing (which I understand), failure doesn't have to be a bad thing. It's through that failure you will learn what you should do. I've certainly failed a lot out here.
If you truly have a passion to create a certain kind of site, go for it. It's virtually impossible to find a niche that is untapped. There is going to be competition no matter what you do. But hopefully your drive and excitement for your idea will help you rise above the competition and your creativity will allow you to come up with innovative ideas that your competitors haven't thought of.
Now that doesn't mean to completely ignore the competition and niche saturation. Take those things into consideration as well. But the most important thing is your enthusiasm for the topic.
There's a big difference between being enthused about making money than being enthused about the journey and the actual process. There are people whose ideas are fueled by the idea of getting rich. Then there are those whose ideas are sparked out of their own enjoyment, passion or desire to teach. Through their enjoyment, creativity, etc. success just happens. In the latter example, making money is still the goal but is fueled by more than quitting their job or making a certain amount in year, etc.
Many people want to own the next YouTube site or Amazon.com without thinking of what they are going to have to go through in order to achieve that status. Their ideas and the end result all sound great, but the means to be getting there may not be so pleasant because their sole energy is focused around "getting rich" and "not failing."
So your goal is to sit back and decide what type of topic really gets your fired up. What gets your juices flowin when you think about it? What excites you? Take that energy and go from there. And most important, you can't be afraid of failing.
Sorry if this sounds too philosophical. I am reading
A New Earth by Eckhart Tolle and much of this conversation is reminding me of some of his teachings.
