Earlier there was speculation Google was going to announce a link NoFollow tag, but as it turns out a whole ton of people got together and also backed the idea.
Players in the new NoFollow tag:

• Google

• Yahoo! Search
• MSN Search
• Six Apart - makers of TypePad & MovableType, who also recently bought LiveJournal
  • Six Apart Guide to Comment Spam

  • Six Apart Professional Network
  • MT Plugin
• Scripting News
• WordPress
• Flickr
• Buzznet
• blojsom
• Blosxom

Ask Jeeves / Teoma was the only major global search engine which did not immediately endorse the tag. Since they look at link clusters blog spamming does not affect them the same way as it does most other search algorithms. bBlog was not on the list, but my friend Eaden said that he too will follow the tag.

Is the NoFollow tag just for blogs?
The change is not a blog only change, but is a change which can be used on any site. If someone else is placing a link to your site or if you are linking to something shifty as an example of something shifty then that would be a good time to use the NoFollow tag.

What the NoFollow tag looks like:
Instead of linking to a site with
<a href="http://www.site.com">Site</a>
the link would now look like
<a href="http://www.site.com" rel="nofollow" >Site</a>

More Info on the NoFollow Tag:
Danny Sullivan has a long post about the nofollow tag explaining lots of the logic behind the new tag and how it will effect webmasters.

How will the NoFollow Tag Effect the Web?

• Many bloggers have amazing link popularity due in part to comments they left on other blogs. This will cause lots of blogs which were primarily connected by comments to lose a good bit of their link popularity.

• Many automated blog spam scripts may work harder to find the blogs which are slow to change. While the number of spamable blogs will go down the value of effective blog spamming will go up.
• Bloggers will have a big riot celebrating this move. After time passes they will still get spammed and realize that this will not immediately cure the problem.
• More bloggers will get approached with a bit of $$$ for writing editorials. More bloggers will sell out.
• NickW is posting everywhere about how he does not like the change, which should be a good way for him to build some link popularity, as bloggers near and dear to comment spam are already linking to him ;)
• Some people who were posting useful and thoughtful comments in part to gain link popularity may post less often.
• Some worry that people will abuse this tag for SEO purposes, but those who would do that could just as easily use other redirects, so I really do not see any change there.
  
• This change does make the role of link popularity (and how to keep it) much more visible. The "keep your link popularity" line of thinking may kill off a ton of natural linking, which in the end really does not help anyone.

• SEOs might rush off to make their own blogs. Certainly the editorial side can be handled on the cheap
• When low hanging fruit is removed from competitive marketing environments other opportunities and techniques also arise. Some people from WMW believe content stealing will become far more common. WMW is the only forum I have seen with significant coverage of the new NoFollow tag with threads here and here

Blog comments sure did make it easy for Joe random schmuck (like me) to rank good about a year ago but the low hanging fruit does not last forever. About 10 - 12 months ago I had a personal blog up to a PR7 with no link buying or renting. Last super bowl Google was even ranking that site high for Janet Jackson... As time passes and the web develops more and more low hanging fruit disappears. As search engines make their moves some will be reactive and some will almost always be one step ahead.