Certifications are great if you’re lazy and ignorant and want to stay that way. If you're a hiring manager, and you're too lazy to want to review a candidate’s resume, understand its contents, and perform the difficult task of thinking whether his qualifications fit your needs—then just hire the guy with the alphabet soup after his name! Or, perhaps you're hiring to fill a position that you don’t understand—perhaps you need a rocket scientist and you aren't one: then you can just hire the candidate with the "CRS" after their name. Rather than needing to come up with thoughtful questions for interviewing a candidate, to see if his accomplishments show that his abilities match your requirements, you can just rely on the certification and be blissfully happy. After all, that’s the premise of a certification: it helps you determine how to hire someone to do a job you don't understand.
Bruce is right that certifications become attractive when the supply/demand/expertise curve starts to break down in a particular area. The real question, to me, is how badly it would have to break down before I got so helpless that I’d just rely on a certification! How many of you would hire a general contractor to build your new home just based on the fact that he has a certification? Or would you (as I would) ask friends for recommendations, then make a point of checking out examples of his work? I might make sure my contractor had insurance, but when it comes to deciding who I'm going to risk my money on, all that matters are solid references and a track record of getting a good job done on time. If the contractor I wanted to hire was too busy, I’d ask him for a reference and I’d check out the candidate especially closely. There’s a reason that people rely on the "old boy network"—it works.
More importantly, when you’re relying on the "old boy network" it’s much more likely that the person recommending someone for the job is going to understand the person's qualifications for that particular job. Modern technology moves so fast that obsolescence of knowledge is a real issue. For example, if someone wanted to hire me to lock down an ULTRIX 3.1d system, I'm eminently qualified. But I’m at a loss when presented with today’s confusing plethora of Linux "distros" —I’d need months of studying and experimenting before I’d be ready to work on one of them. But if I had a certification, maybe someone would hire me by mistake, thinking I was qualified, and then I could do that re-training on their nickel. If someone asked one of my peers who they’d recommend for a Linux project, I'm sure my name wouldn’t come up. But if the job called for a "senior curmudgeon," that would be another story entirely!
The bottom line is that, regardless of whether a candidate is certified, a smart customer needs to know enough to judge if he or she is the right person for the job, anyway. In fact, a smart employer is always going to check references, and is going to evaluate a candidate based on past accomplishments—only one of which may be successfully cramming for an exam.
(*Happily Married Man, Certified Dog Owner)