It loses any sense of what it is, unless you already know. The larger version on the site is quite pretty, but I'm just not sure it works great as a logo. Logos should still be very clear and recognizable even when degraded a lot (size, lack of colors, etc...).
http://www.madebysofa.com/ - Cappuccino logo at http://cappuccino.org
http://metalabdesign.com/ - splash page for http://280slides.com and http://280north.com
http://cocoagrove.com/ - 280 Slides logo and some of the graphical elements in 280 Slides