The problem with this thread and the other Ken started is that they are extremely short on facts just informed speculation.

Yes the Internet in general has an enormous problem with spam sites - as specifics my site(s) get bombarded with log and comment spam and people find spam sites in search results.

Is this a problem for Google? Well just as PageRank had an enormous and not altogether positive on the structure of the Web AdSense has had a huge effect on the content of the Web. Most of the spam sites are in it for AdSense clicks. AdSense clicks are good for Google so spam is good for Google in this sense. However too much spam (MFA, directories etc), assuming the average user can tell the difference, may force searchers elsewhere. This is bad for Google as sponsored results are part of their revenue strategy. Too much spam in results may discourage content creators too which would be bad for Google.

I think spam, duplicate and stolen content included is one of the major problems for legitimate sites as it means less revenue. I think Google has a higher tolerance of spam than us though and would suggest that click fraud is higher priority.