Thanks for all your suggestions.
I am currently working on a more centralized play screen. similar to the iPod app but still different enough (Apple does not want other apps to recreate their functionality too much, so it is a fine line I am walking).
as for the values: I had more numbers on the screen but it looks quite cluttered. however, the fine lines are at 20,40,50,60,70,80,90 100 and multiples of 10 of those. Because they are so close together, I would suggest you use your ears or just enter the frequency with the keyboard (tap on the frequency display top left and type in the number you want).
In the next update, I'll have a frequency lock function so you can lock the frequencies of the control points and just move gain up and down, like sliders.
As for the spectrum analyzer: Equ has one because they are using a fourier transform to equalize the music. Equ is not a parametric equalizer (they never claim it is).
This is also the reason why you observe leakage, as was noted by yuriv here: http://www.head-fi.org/forum/thread/528724/quality-custom-eq-apps-for-ipod-touch-and-iphone-they-exist/30#post_7230787
Equalizer on the other hand is a real parametric equalizer and very accurate using industry strength algorithms.
So Equ gets a spectrum analyzer for free (CPU wise) while if I implement a spectrum analyzer, it will tax the CPU and break my 3G support for sure. And I want to support as many devices as possible.
I know that iPhone4 could handle a spectrum analyzer easily so I have it on my todo list to add one for newer device. But it will not be in the next update.
I am still working on improving the audio engine as there is some room for improvement. (did I mention that I use Equalizer every day myself?)
So thanks again for all the comments and suggestions. I am following this thread very closely.