The site is alright, i think its a little dark, make it a little lighter or add lighter and brighter colors. One other thing is, it took a while to load, dont know if its your server or the way your script works, but with alot of people going on it, it might become really slow. Take a look at that too. Good luck.
Nice site...better navigation than Craigslist. My only thing would be that you need to have a simple way to drill down by location, as many ads will be for physical goods. Maybe a "type your city" box at the top that stores a cookie, with javascript that gives you a dropdown of suggested cities after they type a few characters. Make selecting the city optional, but obvious.
It looks good and it seems you are using a wordpress classifieds theme like the one on my signature. Well anyway, I find the drop down category restricts easy navigation as it sometimes block other categories.