I like the idea of linkedin as a way to connect with others in the professional world in order to show your network and strength, but I also have many reserves about this principle. First off, I really do not want other people knowing everyone in my network because well my connections are my connections. It is almost like giving away your advantageous network for anyone that is friends with you to use. If you or your other connections abuse your contacts and connections then eventually they will not be their for you when need them.
Next, honestly you may be able to do the initial connection to the person with linkedin, but then all communications after should be a more formal way. Our society is becoming a society that is to informal and it is not a move in the right direction. Certain styles of communication are appropriate for certain things. Email is not not an appropriate form of communication for all business related activities. One of the reasons why face to face meetings as well as letter writing will never go away is the personal factor that gets added and gets appreciated by both sides.
Linkedin will aid in the way executive recruiting is done but it will never replace the old way due to its in-formalness. Linkedin is a grand idea on paper but I do not think it will pan out completely. Last I saw they had 9 million users which is impressive, but not sure how it is profitable as a company. In December of last year they brought in a new CEO formerly of Procter and Gamble in hopes of turning the company around. Only time will tell if they are successful, but I think a lot of these sites were developed out of side projects not as a business initially and that the plan never becomes truly profitable.

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