tedster - 12:54 pm on May 18, 2011 (gmt 0)
A lot of people have put this idea on their wish list - Matt Cutts may have even done a video about it (my memory tells me so, but I can't locate it). As I remember, Google said they feel their algo does a good job of dealing with the situation and they didn't want to add an extra feature.
However, the idea comes up so frequently, that I wish they would do it no matter. Even just it's just a comfort thing, it would reassure a lot of webmasters. And I also have seen situations where it looks like garbage backlinks were doing some damage.
I know of small regional news sites that sell obvious advertising and are clearly not trying to be deceptive - but they won't put the nofollow in place or possibly don't even know about it.