We've all heard similar propositions, but at least this request is written by an eloquent persuader who clearly has ambition; it includes social proof and trust factors.
Unfortunately naivety is something everybody has to work through.
3 years ago, I received a very similar e-mail to this on the grad student mailing list at my university. I was naive enough to respond.
I spent a year neglecting my PhD and churning out code for this "startup" while the founders moved gradually further away from the idea of a social network and towards something akin to the million dollar home page. When I eventually quit, they couldn't find anybody naive enough to replace me and none of the other three guys (2 marketing, 1 graphic design) knew the first thing about programming, so the whole thing imploded.
I learned some good lessons from the experience, though.
Don't see social proof or trust factors to be honest.
The reddest flag - "We expect 95% of college students will be active users within 4-8 months." And no insight into how they feel they can do this. Claiming market share of any kind is always tough. In 4-8 months, even more dubious.
Amazing, only yesterday someone asked me to make him a social network "very similar to Facebook or Twitter" for his university, and what it would cost. He expected 50000 users and had his own savings to spend. Luckily he was happy after I showed him Ning, BuddyPress and StatusNet.
"Never ascribe to malice that which is adequately explained by incompetence"
When I first learned to program (err, actually just to press buttons in an IDE, anyway), I had a "great" idea how you could make a site like Facebook, just simpler and better. Thankfully the friend I explained my idea to was more sensible than me at the time.
Reminds me of those posts where people create a project on one of those outsourcing/freelancing sites like "I want an eBay clone" and people reply "Sure, no problem, 2 days - 50USD"
Unfortunately naivety is something everybody has to work through.