During the recent SMX-Advanced conference in Seattle - which I was not able to attend (I do occasionally have to work for a living) - there was a confusion of reports of comments attributed to Matt Cutts that resulted in the provocative (outlandish even?) conclusion that nofollow no longer works to sculpt PageRank, but in fact now causes PageRank to "evaporate" instead.
Dan Thies was at the show, witnessed the entire sordid ordeal and has editorialized on the matter in the way that only Dan can in a post he calls Operation BENDOVER (Huh? You'll just have to watch the video!).
Completely lacking as I am in Dan's sense of humor, not to mention a suitable picture to trump the one he uses of me, I've instead resorted to my old standby — Math. So for the real PageRank computations that show why this reported obit just does not "add up" see The Math of PageRank Sculpting. And if you like that kind of thing, you'll really dig the included PageRank algorithm written in 25 lines of Perl.
Finally, with humor and math taken care of, be sure to read Andy Beard's take on the death of PageRank Sculpting, but just remember that the real point of most "news" in SEO is the humor.