Does this even need this much of a drawback? I feel like the real strength here is the Instant-for-0, not the actual effect I've given it.

Yeah, quite a lot of a disadvantage there. "Hey you! Skip your attack phase, unless you're a token deck, in which case just hit me slightly less. Oh! And do it again next turn because, well, I don't have any mana up or I'd just have used Holy Day so since I skip my untap, you're going to just do it again."

(Ok, it will often work out more complicatedly than that, but that's a huge downside. Free instants are certainly worth exploring though.)

Free instants are pretty useful, in a variety of circumstances. (I particularly like having one or two ready when an Eye of the Storm is getting big.) But there's already a whole range of them, ranging from Gut Shot to Gush to Sivvi's Ruse to Angelic Favor to Invigorate to Fireblast to Intervention Pact to Rewind to Force of Will to Foil. So this doesn't really add very much.

Jon never comments on my cards, but he told me this shouldn't be common because of Pauper storm.
I guess my real question is whether this effect is weak enough to not worry about having a drawback.

Well, it certainly wants a weaker drawback that that. seems about the right, to me, as the cost for an outright fog.

What if it was "skip your next draw step?"

Less likely to be an outright lose - but lose a card just to save one mana? For a card that's quite a lot worse than Holy Day?

I removed the drawback. It's a weak effect. Why not allow it for free?

Yeah, seems reasonable.