Well worth a read guys. For a long time we've known that Google doesn't treat the nofollow tag exactly as we thought, but always believed it was useful for page rank sculpting. Seems like all that might be changing.
http://www.seomoz.org/blog/google-maybe-changes-how-the-pagerank-algorithm-handles-nofollow
http://www.seomoz.org/blog/google-maybe-changes-how-the-pagerank-algorithm-handles-nofollow