I am developing a website that provides Maven microrepositories at http://repo.si.

I found this both cheering and depressing. Cheering because it seems other people are also not happy with the current status quo when it comes to Maven repositories. Depressing in that the solution discussed is quite workable.

I also see that the Sonatype public repository has had more take up since I lasted looked. Should I cut my losses and stop now or is there room for another repository provider?

The github-hosted Maven repo process I described works, but it's far from the ideal of just having a proper repo. I'd like to see Sonatype's OSS repo become the obvious choice (they certainly know what they're doing in that arena, and have a privileged position vis á vis their maintenance of central, and probably what will replace java.net and kenai), but they're not making it as easy as it should be. See my reply to Brian Fox's comment on the original post.

As for whether you should cut your losses or not -- that's a tougher question. I'd love to see a properly competitive market for repo hosting services. On the other hand, I wouldn't want to try to compete with a company that quite literally sets technical standards based on how their products are implemented. Sorry, that's not much help, is it? :-/