Nofollow links are intended to reduce the effectiveness of certain types of search engine spam, thereby improving the quality of search engine results and preventing spamdexing from occurring in the first place.
Recently Google has said that they will still count the nofollow link as an outgoing link in terms of the distribution of page rank from your page. Though again it also depends on where that nofollow link is placed. Placing a nofollow link at the bottom of the page has the least impact, and when placed at the top of the page, it carries some impact.
The necessity of the nofollow tag highlights the crooked and spammy mentality commonly associated with SEO.