Just to recap this it used to be a feature, then was commented out and now doesn't exist any more in the code... and is *definitely* the thing I get asked about most of all!
So, if I could make a Christmas wish for wpmu it would be for a plugin / hack which allows admin of each blog to add users to that blog WITHOUT each user having to create their own blog.
If WPMU is going to work in organisational / collaborative / non-totally-integrated environments I think this would be a key feature.
Anyway, have addressed that to Santa and popped it in the box :)
Cheers, James