The biggest hassle I see in seperate WP installs is the need to patch each one individually. I’ve run about 6 for family. However, this could be seen as an advantage in that you can upgrade to major versions for one or two, but not all. As all these sites were actually for family, we each had to create a login for each site in order to comment.
WPMU solved all this for us. WPMU still allows some of our members not to allow another person access to their blog (and/or comments).
But WPMU also restricts what a blog can do from a non-WPMU Site Admin point of view. You can’t install or tweak much the templates if you’re not a Site Admin. Also, tweaks affect everyone using those templates, so you’d better make copies before you start editing. Overall, it works great for me and my situation.
