Too LinkedIn?

I've been thinking a lot about social networks recently. I can't say why, other than that it is motivated by business purposes. At any rate, I was engaged in a conversation with a co-worker the other day, in which LinkedIn came up. The conversation could be paraphrased thusly:

Me: "You on LinkedIn?"
Him: "Yeah, isn't everyone?"
Me: "Yeah. How many people are in your network?"
Him: "People that I know: 15. Extended network: the entire planet."
Me: "Yeah. There are 5 people in a remote village in Swahili that aren't in my network...yet."

So, that got me thinking. Am I really any better off or more connected that I was before I joined LinkedIn? If everyone is connected, doesn't that mean that no one is connected? Can I leverage a relationship that everyone else shares? If the value of a relationships is based on its exclusivity, aren't social networks like LinkedIn eroding that value? Now, to be fair, most, if not all, social networks that employ the "friend-of-a-friend" paradigm suffer from the same problem. LinkedIn is the particular network that I happened to be thinking about recently, but it be any number of them.

To be sure, I think that LinkedIn is a winner. However, I think they've got to somehow segregate large groups of users and reduce the "degrees of separation" to limit the size of users' networks and put exclusivity, and therefore value, back into the relationship.

Users of LinkedIn, or other similar social networks, let me know what you think. Can being too connected erode the value in your connections? I'm interested in thoughts on the subject, for purely selfish reasons, of course.