I think that Linkedin is a great idea* for connecting with people that you know professionally. It allows potential employers to gauge a candidate's splash in their previous workplaces, and it gives individuals a way to provide 'proof' of their abilities through endorsements. It almost acts like a product review for Employment.
The problem with Linkedin is that people try to game the system. They add everyone they shake hands with, or even everyone in their company outlook account. They'll also sponsor people without working with them directly. This means that the connections no longer have any value. It's about like having 10,000 Facebook friends. They don't really know these people, and they don't know their abilities either.