tedster - 3:11 pm on Jul 27, 2010 (gmt 0)
Hello seo99, and welcome to the forums.
I personally think there can be a problem - depending on how it's done, PageRank "circulation" through the site can get broken by internal nofollows. It's something like a blocked artery in a human body that stops the blood from going through from one important part to another.
There's another active discussion on this exact topic - should give you lots to think about. See PR Sculpting Doesn't Work and Internal NoFollow Can Harm Your Site [webmasterworld.com]