FranticFish - 12:32 pm on Aug 18, 2010 (gmt 0)
The more competitive the term the more likely you are to be up against people with money who pay savvy SEOs to get great links.
In the last 12 months I've taken first place for a non-competitive local small business term with an exact match non-hyphenated keyword domain with one link from its sister site (itself not a strong domain by any means). The site was top ten when launched (even with duplicate content). When re-optimised it went to first immediately.
In a more competitive sphere (information search) we launched a new site which immediately outranked Wikipedia, government advice sites, the BBC and other big names with 100s / 1000s of links, with an exact match keyword domain which had just one strong link from its household name parent site. It hovers around 40 for synonyms and related phrases which are supported by the title tag.
So I see a real and disproportionate boost. If you have the natural keyword domain I think your competitors would have to work much harder to keep up.