It would be great if all of those cool new Web 2.0 interactive elements, based upon AJAX and Flash, things like widgets, Google Maps, content overlay panels, etc. were search engine friendly. Unfortunately, these technologies tend to be inherently unfriendly towards search engine spiders. User friendly usually does not translate into search engine friendly.
Should you avoid Web 2.0 functionality that improves the user experience for your visitors? If your budget is incredibly small, perhaps. In an ideal world I believe you can have your cake and eat it too. You can harness Web 2.0 technologies for wider syndication, improving conversion ratios, enhancing the user experience to engage your audience and still rank on the first page. I believe that you should design for your site’s visitors, not the search engines.