When considering co-founders, I picked the designer and the genius (I'm the voice).  Lately I've begun studying what investors look for in a startup, and see that we may raise red flags by not having a programmer as a founder.  Is a technical founder something we have to have?

I can answer purely from an investor's viewpoint and the answer is definitely yes.  Things have changed so much recently regarding getting funding and expectations are different.  One of the most important changes is that, with development costs freefalling, when a team comes into our office, we expect them to have a demo, a (rough) product we can evaluate, give feedback on and potentially iterate in the course of our due diligence. The feedback loop is longer, requires more interpretation and is fraught with greater risk when the core technical expertise is housed externally.  In that scenario, our bias is wait and see if the team can manage toward a working product rather than engaging with them on what makes the opportunity so great and what will make the product even more successful.  Putting investors in wait-and-see mode is not what you want. has spoken extensively about this on TWiST.  In my case, the title of a talk I'm giving in January on fundraising is called "In God We Trust, All Others Must Demo," and speaks to this expectation.

Contract development is a great way to get burned, especially if you are inexperienced managing a contract development team and an unknown in the tech arena. For someone with limited technical experience, I'd mark a technical co-founder or technical early hires with equity as a necessity - without a way to translate your voice and design into a set of technical features, it's going to be very hard to get a group of developers to do what you want. There's also a technical side to thinking about a product that's valuable to have in a founding team - the process of distilling a product idea into an implementation via code often yields amazing ideas for the product itself, but contractors without much equity aren't going to be very inclined to contribute these ideas back to a product they don't have a stake in. On the flip side, contract development could be just the ticket if you have the amount of technical expertise necessary to distill your product ideas into features, your ideas are very nailed down, and you can comfortably manage contract developers. Plus, the more clout you hold and the more interesting your project is, the easier it is to find and manage contract developers - if you're a feather in their portfolio cap, they'll be sure to develop an excellent system they can show off or name-drop to future clients.

Yes, for a tech startup you need a technical person. But having a great designer is very very good as well. You should add a programmer if there is a lot of technical work that needs to be done. Here is a tutorial on some further things that investors look for:

What should matter most to you is progress and traction. Once you have that, investors will follow you. If you have a Designer in your founding team, that's great! Be happy with it, and both of you work your ass as much as possible to move fast while learning everything you can on the customer angle. If all the above happens, not only investors will follow you but also you leverage your chances to find a great technical co-founder or a CTO.

You need to consider if you have the finances and the expertise to operate without a programer cofounder. Consider the following: How much will it cost you to hire developers to build a prototype to show to investors ? - can you afford this ? Do you have experience in managing freelance developers ? Do you have experience in hiring developers ?

Does writing 10% better code/architecture means far better chance of success for your startup? If yes, you have already answered your own question.

Definitely. Take it from someone who was in the same position. Unless you are making an e-commerse site, you will need a technical co-founder.