Guy Kawasaki has a good list of tips for LinkedIn users.
I've been surprised at the amount of people I know who I've found on LinkedIn. It's a great way to get in touch with former colleagues and acquaintances.
The comments on Guy's article give some tips on how to use LinkedIn more effectively. While I've found the social networking aspect of it interesting, I haven't used it much for networking beyond people I already know. I haven't gotten any job offers or requests to get in touch (i.e. where someone asks you to put them in touch with someone you are linked to) so I'm not sure how big activity across the network is. A friend of mine did get a couple of job offers through it though so it definitely does work for some!
Key to using these types of sites is being active and keeping your profile up to date. A lot of people create an account, add a few links and then never log back in, thus not really getting value out of it. Maybe social networking for business purposes follows the 1% rule and is therefore a bit overhyped?
I think the key thing that LinkedIn seems to be missing is free messaging facilities. At the moment you can't invite someone to your network unless you've worked at the same company or gone to the same college as them or if you know their email address. That makes sense but doesn't allow for getting back in touch with old classmates or colleagues. LinkedIn also doesn't allow existing contacts to message each other within the site, like users can within Bebo or MySpace. I think because of this lack of interaction between users LinkedIn doesn't count as a "social" networking site.
Business relationships are as much social as they are about exchanges of goods or technical knowledge and I think LinkedIn misses that point, which is a shame.