tedster - 4:20 am on Jun 11, 2010 (gmt 0)
I'd say linking every page to every other page is not really navigation - it's more like a having sitemap on every page. The problem is that this linking style blurs many of the unique signals of each page into one big pile. It's like being at a meeting where everyone's name is David. Yes, they all have last names too, but it still makes things just a bit crazy.
On sites that are bigger than yours, sometimes CSS hover menus have the same effect. I've seen sites with over 1000 links in a hover menu - so every page STARTS with 1000 links! And the reason I get to see some of these sites is that they're having trouble getting Google traffic.
In my experience, it is better to create an effective Information Architecture [webmasterworld.com], or "IA". Some pages should not be 1-click away from Home, for example. It can be challenge to design a really good IA, but your visitors usually will love it when it's done well.
The users will reward you by spending more time on the site. And there can be Google rewards, too, by featuring your best pages on more targeted searches.