The main objective of the no-follow plugin is to reward your loyal commentators. The side-effect is that it will also encourage ppl to comment more on your blog. However, this may attract spammy comments but as long as you are on top of the situation, this should be a problem.
It doesn't attract spam, I use it if you use it the idea is it allows you're commenters to get something in return.
Also, you can get your blog listed in various do-follow lists once it is do-followed. That'll get you more visitors.
I recently removed the nofollow on my internet marketing blog. Too soon to tell if that itself has increased commenting...
I have removed the nofollow with the Dofollow plugin. Although, again it's just for the comment area anyway, most other areas are dofollow anyway. I have the "Top Commentators" and those folks are getting DoFollow also.
i have do-follow on my top 10 commentors, but no-follow on the other comments. I think it will work well to encourage new comments
When the blog is more popular, I might do a reward for like top 5 commenters, this will also encourage growth (hopefully)
truthfully I dont know, I have top commentors in my sidebar but Im not sure if they or comment links are dofollowed, what ever the WP default is.
If you want to get more folks commenting, switch off the "no follow" tags and submit it to the Do Follow Blogs directory (www.dofollowblogs.com) this will increase your comments.. I have found I've been getting quite a few comments since submitting a few blogs to the site, and they have mostly been of high quality. (Have had to delete a few spammy ones, but that's the trade in I guess from making the blog look more popular with the increased comments.)
@Sutocu thanks for correcting me, there a pluggin to correct it. @Cornflower thanks for the directory