Wow, all these posts, now I know why I don't have time to go on and post very often on sites like this one.
I must say I am impressed w/ all of the discussion. Well thought out, and very intelligent questions.
I have a couple of answers for you based on the questions I have seen asked:
First of all, you will probably never see "DesignAShirt" listed as the plantiff in a lawsuit. The software is owned by an LLC called Havana Club, who is the one who files the suits.
As for major resources, I built the first version for $100K, but have spent lots lots more getting it to where it is now.
As for the copyright, etc, when the photos that are being used on the site are of your own kid, I would say that this would constitute a clear copyright violation. All of the photos and about 90% of the clipart is directly from my office, and was either purchased by us, created by us, or in the case of the photos, my buddies or my kids are the models, and I assure you we didn't give Kumar at Infogate permission to use them.