There are different opinions on this question among VCs and other authorities in the tech and startup communities. (see: Fred Wilson, Chris Dixon, Brad Feld). Should startups try to raise as much money as they possibly can, or are there potential issues associated with "over-raising" funds in the earliest round? I'd love to hear different opinions on this.
Conventional wisdom is: raise as much as you can (unless your name is Color.com :-)
The main reason is that it takes as long to raise $300K as it takes to raise $2M, and it lasts longer. The trick of course is figuring out what amount is actually doable. If you ask for too much and get rejected all the time, you'll have spent 6 months fundraising with nothing to show for it.