Google has confirmed it checks domain whois records. A lot of people will find this surprising, because in the past it only took its data from crawling sites. Whois monitoring is "off-site" spying and I'm not thrilled about it.
I think Matt said one issue is volume. If you have many domains with whois privacy, they'll get suspicious. That and what Ted said. They probably think a multi-domain owner is the profile of a spammer (even though it's not always true).
"Having lots of sites isnít automatically bad, and having PPC sites isnít automatically bad, and having whois privacy turned on isnít automatically bad, but once you get several of these factors all together, youíre often talking about a very different type of webmaster than the fellow who just has a single site or so."
If I want to build new sites, I'd prefer to avoid spam with whois privacy. I'd also prefer to have them on the same server because it's cheaper and site management is faster/easier. Who wants to have to find a different host for every new site and pay extra!?
If Google spies on your whois records, it may also spy on your IP address... if you have many domains with whois and they're all on the same server and they all link to one another, Google algo says, "We found a link farm."
Matt Cutts On Having Lots Of Sites! At PubCon
Don't forget, too, Google has Reverse Lookup with Adsense. Most multi-domain owners are probably not businesses, just publishers using Adsense/equivalent service that has an account id which shows up in page code.
So they don't even need to check whois records or consult the Adsense dept to find spammers/junk sites.