The nofollow attribute is a double-edged sword

Kevin Burton at Feed Blog reports, while the nofollow attribute was a move by Moveable Type, Wordpress and others to cut down on blog spam, it punishes bloggers who create links within comments and is cutting down on the number of links between blogs. As a result, legitimate links have been lost from blogosphere's ranking algorithms.

I for one miss getting inbound links from blogs in which I have left comments.

While blog spam is an increasing problem, I wonder if the nofollow attribute, word verification for comments, and "Flag As Objectionable" are examples of how blog hosting companies are throwing the baby out with the bath water.