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There's been speculation about this, now their official policy is part of their Webmaster Guidelines:
Full text here
That should "stir the pot" a little bit :D!
Your site's ranking in Google search results is partly based on analysis of those sites that link to you. The quantity, quality, and relevance of links count towards your rating. The sites that link to you can provide context about the subject matter of your site, and can indicate its quality and popularity. However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites. This is in violation of Google's webmaster guidelines and can negatively impact your site's ranking in search results.
Full text here
That should "stir the pot" a little bit :D!






