Servicemarks do not mean that it's a drawing. Service mark means that its a business offering services instead of products. It otherwise works like a trademark.
OK, the deal here is just like it is on pretty much every thread here. It's only a trademark violation if three conditions are met:
1) Confusingly similar to a trademark. It appears they are trying to establish one. They may already have one and are just now registering it, or they may not have one at all. hard to tell. So let's just for the sake of argument say they have one and move on.
2) No legitimate purpose. NS8 could have all sorts of uses. Even if they do have a trademark, you can still have a legitimate use in some field other than the area for which they use their trademark. So if they have NS8 for, say, financial services (I didn;t bother to look up their application, so that may not be it), you can use it for some other field. A trademark on a word doesn't give them the right to prevent anyone else from using that word for every business out there, just ones competing with them.
3) Registered in bad faith. They are going to have a very difficult time proving you registered the name knowingly to infringe upon them.
So, basically, from a glance, and I am not a lawyer and blah blah blah, this whole threat of filing an ICANN dispute is nonsense, because they can't prove 2 out of 3 of the things they need to and the other one is debatable. It's apparent they either have no clue, are just trying to scare you into selling, or both.
If you want to sell for the price they offer (seems low to me, idiot emailing you probably got paid more than that in the time it took to write that), agree to, otherwise tell them that you have no intention of using it in a way that would infringe on their trademark and so there is no conflict.
That's my advice anyway.