Daniel Scocco has written a really great blog post at Daily Blog Tips of the importance of domain names--that length and quality do matter. After looking at the Alexa top 250 sites (and the "last 250 sites on the front page of Digg," he concludes that good domain names are vital in the long term success of the site:
All other things being equal (e.g., marketing budget, content quality, design, affiliation with larger websites and so on), a website with a good domain name will always outperform a competitor with a bad or average domain name.
The blog post is a great read, and is especially helpful on a personal note to convince a few people I know that their domain names of choice have been less than ideal.
Forum discussion continues at Sphinn.