Does uploading music files from the hard disk of a user to a music player app illegal?

I was just thinking of building a web app(for learning purposes) that would let users upload their music files on to a server and then create playlists that could be heard from anywhere in the world by logging in using and i.d.
I was also thinking of making it a mobile web app and let people listen to their music by connecting to their internet from their phones.

Is uploading files from a user's PC to a server and playing it back anytime, anywhere, illegal? If the music that was present in the PC were pirated would my app also be a part of the criminal act?

1. Yes. (Don't you read the news?)
2. Possibly. If you are caught, it will likely be your burden to prove you did nothing wrong.

Even if the users owned the music on CD it would still be illegal in the US.

http://en.wikipedia.org/wiki/UMG_v._MP3.com

UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y.
2000) was a landmark case before Judge Jed S. Rakoff of the U.S.
District Court for the Southern District of New York concerning the
Internet. The case concerned MP3.com's unauthorized duplication of
essentially every music CD ever made for the purposes of launching a
service entitled My.MP3.com or "Beam-it", which allowed users to
access their private music collections online from anywhere in the
world.