So with the old browser sniffing way, your Firefox 4 user will still get the shiny buttons and rounded corners even if he has no JS. With Modernizr, he'll (at best) get the watered down IE6 version with flat buttons and sharp corners, etc. At worst, if you're not doing progressive enhancement right and you've based critical functionality on one of the injected classes, you might cause some real problems for this user.
I guess I just see this as a limitation of Modernizr, and not a reason to throw out the baby with the bath water. I still love it and use it in all of my projects.