Unfortunately they do to some degree when first exploited. As I alluded to above, I think there are other things at play here. For me, I am now leery of clicking on links that are converted through a URI shortening service. I'll follow them on Twitter because I'm trusting the creator in that instance. But I would NEVER follow one that I couldn't determine the destination and/or the source.
Do you think people are still going to follow those TinyURL links so freely now? As this becomes more and more "in the wild" as they say, you might think that industry has a short life span right now. Anything that interferes with the click to the destination is at risk of being retired to the marketing graveyard. ;)