My reaction to this article was that it incorrectly lumps together various distinct techniques, leaving only FUD (fear, uncertainty and doubt) in the hearts and minds of its readers.
Paid Inclusion is worthy of this response: it is stealthy in that it is invisible to even determined lookers. Anyone who believes that PI doesn't affect relevancy is a simpleton. There's nothing wrong with PI, except that it masquerades as "pure" search. No good can come of this deception in the end, for it leaves everyone with a bad taste in their mouths. It cannot last.
PPC is a whole different animal. Overture had it right in 1998: tell people that their results have been paid for, and everyone will respond just fine. It has worked in TV for years, why not here on the net? While it seems recently some have found a way to abuse organic results in Google (getting sites listed in order to promote Ad Words), I expect this will be quashed sooner than later.
So, should all commercial oriented sites be banned from the "pure" SERPs? Of course not: the Internet is, at its heart, a conduit for commerce. I might have heard a rousing dissention pre-bubble, but now everyone still left in this world should know what side their bread is buttered on!
Sure, it's a great place to find facts (most of which are sponsored by ads) or entertainment (which is fee or advertising based), and for the occasional public service announcement. But for what's left, someone is selling something.
And this is where the PC World article fell into the righteous populism that's so common in trade journalism. Why? Because it sells something else: magazine ads! OK, well it's more than just that, but this kind of journalism falls squarely into the "media hype" classification. People want to read about controversy: if only the media could present the meat of the controversy in a lucid way!
As several have rightly pointed out the query "ionic breeze" was silly -- if one in one hundred people are thinking about some cosmic event rather than the air purifier, perhaps they would have the fortitude to look through 100 results. The rest of us are looking for the product. (And just to point out the other silly bit in this article, the "good" epinions result for his query is owned by a site called shopping.com -- hmm, any ecommerce nucances here?).
And while the actual news here is that MSN and AJ are both dropping paid inclusion, this only rates a second page mention. Aaargh!
But the dice are cast, by this and many other similarly muddled articles. People don't trust their computers (never have) and now are being conditioned not to trust search results. Shame on Ask Jeeves for being amongst the first to use paid inclusion, and for Inktomi/Yahoo, then MSN for making it significant enough to be noteworthy. They got caught by the journalists, but we all pay.
So the SE's continue to face the dilemma: should they give people what they are (really) looking for, or skew results in order to present the face of impartiality by displaying an array of possible types of response (iconic breeze: the product, the cosmic event, or perhaps the song by some obscure New Age band :-). Of course being able to do this suggests that SEs are able to distinguish between these types, but the good ones probably can. Diversity or accuracy, that is the question.
As several people have pointed out, Google and others almost are forced to respond (so, another Florida is due, for sure). In a time when Google's IPO has brought about so much awareness of the critical role of search engines, despite their incredibly purist and populist ethos, which some might call naive, Google's motives are being questioned right along with the rest, MSN gets no credit for doing the "right thing" and Yahoo is just another mention.
The result is that users and e-commerce sites will both suffer.