I've never used MU by itself, I only started using it when Buddypress came out, but, many regular plug ins work with MU and you can activate them site wide. You definitely want to stay with the reliable plug ins that are updated frequently. The best place to get MU plug ins, themes and Buddypress plug ins and themes, that are good, reliable and with support is http://premium.wpmudev.org/. It's a membership site and I resisted it for a bit, and at first seems expensive, but I can honestly say that it pays for itself almost immediately. Their stuff works, and they have support. I spent weeks messing around trying to get an MU/Buddypress site together using free themes and plug ins and I got nothing but frustration. So many plug ins aren't updated, themes that aren't coded properly and limited options. Within the first 48 hours of signing up, it more than paid for itself and I not only got that site up (after 3 weeks) but a second (which took me about 3 days). I wouldn't normally endorse any paid stuff on the forum, but it really is worth it if you are working with MU or Buddypress.
Buddypress adds community and social networking features to your WPMU and Single User WP installation. Check it out here:http://buddypress.org/
Cool thanks for you help, ill look into it a bit more! One thing I have noticed though, I get emails from a hosted blog everytime they get a comment, do you know why that would be?
It's probably because your email is still listed as the admin email or you have "Notify me when someone leaves a comment" checked. Have the user double check the settings to make sure that their email address is the admin.