Haven't used it yet as I thought it was specifically for when there was no control over links, but in yesterday's blog entry Matt Cutts comments on how the rel nofollow tag can be used to link to a "disreputable" source without it counting as a vote (or incurring the G displeasure, I'm assuming)
That's good to see, as I've dropped a number of links to "dodgy" sites for safety reasons, so it seems like we're getting close to the point where it can/should be used more widely, for safely interlinking domain networks for example.
Adding "nofollow" doesn't mean "this link is not part of seo manipulation". It only means "this link is not a vote from this page on that page". An unusual pattern of nowfollows might be seen as a sign of black hat seo.