I've been to my dojo on nights when it looked like a black belt academy; I was the only kyu rank or nearly the only one. On the other hand, none of the black belts had less than 10 years at the dojo, and most of them were in the 20 to 30 year range. So, I think in that case, having a lot of black belts shows that we have a lot of retention (and we're not a big dojo).
I asked the typical newbie question when I started - I was told white to black could take anywhere from five to seven years. The fastest time on record was one of our sensei's who passed away last year - he earned his black belt in 4 and 1/2 years. Most everybody else takes longer.
I've been training now for nearly 4 years. I've just earned my ni-kyu, so I have another year to ik-kyu at the least. Maybe I'll earn my sho-dan at the end of 2013; that would be five years. If it takes longer, it takes longer.
One thing I know is that when I earn my black belt, there will be no question as to whether or not I deserve it. My sensei would turn me down in a second if he didn't think I was a black belt. But our dojo isn't really run as a profit center; no one involved gets paid; our monthly dues just keep the lights on.
I've seen some young men and women in other styles who have earned their black belts in a much shorter period of time. It doesn't bother me; but on the other hand, I'm mature enough to not feel threatened by it. Maybe they're better than me. Maybe their black belt doesn't mean what our black belt means. In any case, I'm not competing against them; only myself.
Now, to answer your question specifically about attracting students, my sensei has always said he likes brown belts. From his point of view, as I understand it, he thinks his black belts are so good that newbies look at them and think they can never attain that standard, so they might become discouraged. He thinks brown belts are the backbone of the dojo; the NCO so to speak. He thinks new students can look at brown belts and think "Hmm, I could see myself able to do that someday." Hey, I'm a good example of a bad example! Wanna see a kata screwed up, I'm your guy!