n00b1 - 10:09 am on Aug 16, 2011 (gmt 0)
Personally I read it as "If it is a popular site you're linking to as an affiliate, we will know about it and treat it appropriately". The bit about 'ads' is in a different context.
Having said that I would just suggest experimenting with both. I won't rule out coincidence in my case but I can tell that there was a time (way before Panda) when my website enjoyed top 3 rankings for many terms and I made no effort whatsoever to nofollow any affiliate links. I then did add this attribute to all affiliate links and saw a little downward movement but nothing particularly alarming or sudden. Then 'Panda' comes along and my website falls down quite considerably - it is only once the 'nofollow' attribute is removed once again that the website websites jump up (and this time it was a sudden and noticeable jump).
I am half-willing to put back the nofollow and see what happens but I say if it ain't broke, don't fix it.