Interesting concept. The "world changing while man adapts" angle is the cornerstone of many RPG worlds, and it is used well here. Not sure why the dragonmen-like Dragoons are in this setting right now, but I guess it does give a bigger boogeyman to fight eventually, and perhaps some future explanation for why it all is happening.
Pretty original concept. I like it as is, cleaner this way with no magic and steampunk stuff. Simple, yet interesting. I also REALLY like a system that forces people to take flaws, because if you really want good roleplay you have to have bad things happen to the PC's. Course, not everyone who plays these games likes that, but perhaps we could make it so that if you roleplay (NOT RESOLVE) your particular problem well you gain some super excellent bonus to your PC with XP or something. *shrug*
Fairly inspiring. I can imagine some pretty nifty badguys and monsters, and many of them can be outside the more traditional fantasy aspects due to the nature of the concept. I think the Dragoons could be used to do great things in the story, or they could be cliched retreads. Up to us, I suppose.
Decent writing, a few difficulties in run-on sentences. I like the author giving us his intentions of it being a game of personal horror and about having the player feeling weak and desperate. Those kind of games can be awesome and make lasting impressions on players, though some players who want to escape and be uber will likely avoid it.

Comments
RE: robosnakes reply
yeah I was going with a bit of a Lost feel with some of those ideas, I have some more in depth character concepts but I took them out of the submitted work because I thought it better to keep it more generic.
the name
So before anyone asks I couldn't think of a name, saw swarm put it with 2012 and thought it actually rather fitting for the concept.