||Jeremy W. wrote: greater flexibility and greater portability should you want to move the blog later.
Your blog would be stored on another database that you don't have access to, so how is it easier to move your blog posts from a shared database to your own website?
Ignoring RSS Export/Input, of course, since virtually all blogging engines can do that now.
Flexibility: in themes, in full access to the presentational code, in the ability to add your own themes, in full access to all of the Options panes of Wordpress.
The deal with WPMU is it gives folks the full power of WP, without having to host it themselves. So everything that makes WP better than any other hosted app is present in WPMU. Done.
In terms of portability, WP will import/export to any service. I have no idea what you mean by "RSS Import/Export", in terms of moving the site to another service, however WP is part of every major standards project out there from FeedMesh to the new OPML work
being done to the new syndication work being done. Going with WPMU or Wordpress.com gives you the benefits of all of that, as opposed to just a massive XML file (if you're lucky) from the other services.
Again, with any WPMU-based system, you could literally do a WP backup, then a WP restore and you'd be set. Your theme would come, your posts / comments / authors would come and you'd be set. If you wanted to move to another service, you can pull your theme
code and images down through WP, export your posts / comments / categories / authors and be set.
Many other services allow some of this, but the strength of WPMU is that it's WP, just abstracted out so that each blog is its own unique environment. You don't lose any of the features in the transition.
It makes Typepad et al look like crap.
As I said before, though, if you're looking for a more social app, then an WPMU-based host won't be the best way to go. Yahoo 360 or Spaces or whatnot will likely be better.