While reading this article on Wired about Friendster's seemingly hypocritical policy of banning "fake" profiles (like of, say, a pet, or Jesus) but taking money from DreamWorks to develop fake profiles for the characters in Anchorman, I wondered about the wisdom of such a policy.
From a purely intellectual perspective, it would have been interesting to see where the members of the Friendster community would have taken it, had they been allowed. I'm certain that the system would have grown in ways that the Friendster crew would not have imagined had restrictions not been placed on the system's organic growth.
From a business perspective, I wonder what opportunities would have arisen had system growth not been restricted. Seems like it's short-sighted to focus on the quick bucks (Anchorman) while at the same time restricting your users' ability to innovate for you for free.
I haven't yet read The Wisdom of Crowds, but it seems like listening to groups of users of your system is a worthwhile exercise.
Banning users also appears to be an especially poor move on Friendster's part now that Pretendster has sprung up for those who have been banned from Friendster. I'm confident saying that driving your users away with a bad taste in their mouths isn't a viable long-term business strategy, especially when your business depends on network effects--in other words, the system's utility increases with the number of users of the system.