is it because they dont want groups to search and see they are hosting illegal content? I mean i assume that most groups already know that sites like rapidshare and megaupload are hosting illegal content...
If they have a search option then it'd be easy to find illegal stuff. These hosts are very big and its really difficult to control and monitor what kind of files are uploaded. But if any illegal content is reported then they remove the files from their servers. Though there are a few sites which can search for the files on these servers. But these searches are not accurate as filenames of the uploaded files are used to search for the given keyword but anyways they are helpful.
They don't allow search because they want users to have the freedom to upload personal content and know that it will be safe. It is concerned with privacy, not piracy. edit: from the RS faq: