You are entitled to your opinion, but if you use Youtube you have no place to talk (and Google seems to think Youtube is pretty legit). It's the same business model, just a different market.
While I don't think YouTube was nearly as explicit about it before Google owned it, it does at least now tell you on the upload page not to upload anything to which you don't own the copyright. In a quick glance at Grooveshark the only place I saw any mention of this issue was buried deep in their TOS.
They in essence encourage you to upload copyrighted works so you can access your music anywhere, and from a first glance at the interface it's not even excessively clear that you're sharing your music with others by uploading (as opposed to it being a private library).
This of course is all further complicated by the fact that they apparently have licenses with some labels, and not others. I would presumably be able to legally upload some music, but not all (I guess YouTube actually has the same issue there).
Add to this the fact that the RIAA has shown it doesn't mind suing end users at all, and I wouldn't upload anything to Grooveshark. Incidentally I also wouldn't upload anything copyrighted to YouTube.
