I sat in on one of Etsy's virtual workshops today to get my store critiqued. Overall, it sounded like I was doing most things right.
Things I'm doing right:
1) Good pictures, using angles, natural lighting, etc...
2) Cute items
3) Overall good look of the store
4) Good listing of other promotion sites like myspace, facebook, etc...
Things to improve on:
1) Shorten the shop announcement so items appear at first glance by customers
2) Add shop policies
3) Better utilization of tags - use all 14, and include colors in tags!!
I'm definitely going to do these things! While I think marketing seems to be the number 1 thing needed to get business, the look and feel of your shop is a close #2!!! Still trying to figure out the marketing thing!