$hash = hash_it($password, $crypt);
So it is fairly clear that $hash and $crypt would be stored in the DB. $crypt is a reasonable (but not great) salt:
crypt($user.$time.$rand);
$user is obviously known, $time is the time when the password was created - or maximum ~2000 possible values for most systems. The main part of the hash is $rand, which is 31 bits of pseudo-random entropy. So about 40 bits of entropy if I'm not mistaken? That should be enough to make it infeasible to create rainbow tables in advance.
EDIT: I'm wrong on $time - it is "mdYHis", so much more than 2000 possible values and is actually pretty decent in the salt, as it's unlikely an attacker would know which user registered when. Unless you publish the registration date as some forums do...
EDIT2: While user is known for each user, it does add extra required input for a rainbow table - if there are 1000 users and you know all of their usernames, you would still need to generate 1000x more rainbow tables (1 per known username) if you wanted to crack all 1000 passwords. Also slows down brute forcing, as you can't use the result of one 'trial' on all users at once. (Correct?)
The real main issue is the speed of brute forcing MD5/SHA1 - it's probably possible to brute force these passwords very quickly if the database is stolen. Use of bcrypt is therefore obviously preferred to slow it down - but it is also very likely that FPGAs can brute force bcrypt just as fast, so I'm not sure how much I agree with the common mantra of 'sha1 is useless, use bcrypt'. bcrypt does, after all, have a speed impact on your login requests and puts more load on your servers if you are handling thousands of logins per second...
I guess large scale FPGAs are probably only in use by NSA and some syndicates, while far more hackers have access to mass GPUs?