In Matt's latest video blog titled Should I use the nofollow attribute on internal links? [youtube.com] he takes 2 minutes to emphatically say "NO! DON'T USE REL=NOFOLLOW ON INTERNAL LINKS!"
I've never personally used it and have never recommended it for internal "page rank sculpting" but some people still promote this crazy trend regardless of the fact that Matt has pretty much emphatically said "don't do it" forever.
I knew someone that attempted to sculpt their internal links once and Google dropped some very odd pages from their site apparently from having the flow of page rank broken throughout the site. Once they removed the NOFOLLOW from the internal links the problem quickly resolved itself.
Again, internal page rank sculpting via REL=NOFOLLOW is a BAD IDEA and can do more harm than good.