Grrreat idea
I love the idea of this, and the artwork is okay. Now comes the bad stuff: I found it very hard click things at the right moment, maybe you could have an option which enabled the arrow to move half-speed for recording. Another thing (which made it even harder to click at the right moment) was that it started to lag anytime it played a sound.
If you make a new version of this (which you definitely should) try adding an ingame menu with play/pause/record buttons, and add a wider variety of sounds (e.g. there was no bass, and only one click (short, handy for rhytm)