I took a beating on the SEO blogs for calling SEO a bug a few months ago, but I'm glad the rest of the world is finally realizing that I'm right :)
Ultimately, Google is trying to rank you highly for providing the best content; you shouldn't be spending your time trying to figure out how to game Google by making superficial changes to the presentation of your content. Want to rank better? Write better!
The whole problem is rooted in the fact that Google is a leaky abstraction. It tries to be an omniscient Sherpa, guiding the wary Web traveler with its infinite understanding of the Web and the individual user's needs. The reality, though, is that Google is actually just a computer program. So there is a gap between the user's mental model of Google and what Google actually does, and it's this gap that SEO exploits for its own profit.
An infinite amount of exploitation would mean that Google would just return results randomly, and so it makes a lot of sense to detect signs of SEO and penalize the behavior before it further broadens the perfection/reality gap. Gaming the system is currently profitable, since the worst thing that can happen to you is nothing, but the best thing is that you get more traffic. A penalty aligns the risk/reward spectrum to favor "write better content" rather than with "spam a bunch of wikis".