Cool site, dead simple. You might want to make the services page more friendly, though. I know 3 languages, so you're expecting me to enter 6 combinations by hand, one by one? Why not just let me state which languages I know, and generate all combinations? Then allow editing of rates for all of them on one page.
I like your site. It seems fast and simple, though I didn't step totally through the process. You don't require a lengthy sign-up, and it's obvious what I pay and what I get.
You have set up your site a lot like the traditional sites it seems, whereby you manage the stable of translators. Did you consider doing the site more like 99Designs, where the crowd decides without mediation?
I don't think of Caterpi as something to manage translators; it's more of a platform for translators. This is an important distinction to make, since traditionally, translation agencies frown upon direct communication between translators and their clients.
I haven't really thought about having the crowd compete to win a translation contest. It seems like it could be viable for long/costly translations, where each competitor would submit a small portion of the translated text.
If you're looking for more information, I'd check out mygengo's blog. It turns out the majority of their translations are for short snippets of text (such as emails). I do think that translation is a big market, and that it's only going to get bigger -- so it's definitely worth researching.
I've been working on launching a site like this for the last 5 months. Feel free to check it out: http://www.caterpi.com/
Also some competitors in the same space: http://onehourtranslation.com and http://mygengo.com