I'd guess most (if not all) founders whose businesses failed have been positive about yc.
I remember reading a blog post by a yc-funded news startup that failed, maybe in the fall of 2010. I can't find the article at the moment, but I specifically remember that the founders described the YC partners as being a "class act" during the process of dissolving the company.
I submitted my application the day they opened up, I am now in "holding my breath" mode. Which by itself will be an amazing feat since, even if I am accepted, I won't hear until the end of March. Meanwhile I am focused on the design and demo.
One thing that I'd recommend from personal experience is iterating the application just like you would your startup. Read http://ycombinator.com/howtoapply.html and then reread your application. See where/if some of the things that he talks about are present in your application. When I first did this I was shocked to see that I did almost all of the things that he said that you shouldn't do. I went back and updated the app. Then I repeated the cycle a few times. Lastly, as my product developed and I described it to people, I learned where to focus and refined my description and ultimately went back and updated the app again. Not that I am an expert by any means, just my 2 cents.
I submitted it early so I could do exactly that. Thanks VERY much for the link. I am ready, after a couple of days of not looking at it, to look at my application again with fresh eyes. Great 2 cents! :)
The best advice I think you can get is: Get an alpha in other people's hands to test out. feedback on a pseudo working alpha is much more valuable than feedback on theory. Get your demo in as many hand as possible, get feedback, then iterate.
