Google isn't going to use your host as a way to determine if you are a spammer, they will use your Registrar details. Once they get hold of one of your details, they can quickly cross reference it to discover all your other domains. Public whois protection doesn't help you. Registrars have full access, and Google is a registrar as well. For those that wish to debate this, please refer to the ICANN Registrar Agreement that every Registrar in the world must abide by.
As for the other reasons to have your blogs on separate IPs, these are some of the reasons.
- Dedicated IP will ensure your site runs and is indexed optimally.
- Dedicated IP will prevent others.. say your competition, from being able to do a reverse IP lookup to view all the rest of your sites you are running and potentially either steal your keywords, niches, and/or report you to google.
As for server resources, I don't nickle and dime that point, I get a proper server to handle that. I use virtual dedicated servers that have enough power to house however many autoblogs I want to run. So all this stuff about trying to run under a shared host, if you want to deal with those headaches, you just will have to deal.

As you have heard, a single autoblog can create enough server stress to get your account suspended/terminated. It all depends how you configure them, and everyone does this differently.
As for google and the registrar details, I cover that too. Nobody would ever find which domains belong to me. I put quite a bit of detail into the personas that carry each site. They all have their own contact details, emails, etc.
As for adsense.. remember that every site you put your pub on will be associated all together, regardless of all the various precautions I just cited. Build enough crappy/spammy websites and your pub ID will definitely be used to identify and deindex all your sites. So really if you are going to use adsense on various sites, it doesn't matter where you host them. Multiple accounts is always a good idea.
Hope this helps clarify what the fuss was all about.