I do not use the "nofollow" attribute anymore. I have developed better and more secure techniques instead.
But since the discussion is about the "nofollow" attribute, it is still legitimate to use for OBLs. But not for your web site internal navigation.
Here is a good read about the claims of the famous SEOs: PageRank Sculpting - Ok Or Penalty Material? 10 SEO Experts Respond. » UK Search Engine Marketing