There's an interesting conversation going on in the blogosphere. The most prominent is Guy Kawasaki's The Top Ten Reasons Why PR Doesn't Work post.
Mike Manuel at Media Guerilla has this to say:
"Personally, I have no retort, no counterpoints, no defense, and no qualm, just a suggestion really for those that believe this: go try advertising."
Advertising doesn't work either, and I can prove it: Do you subscribe to the daily newspaper? if so, with out looking tell me what was the advertiser in the full-page ad on page 3 (probably the most expensive real-estate in the entire paper).
We are already so over-saturating with mass advertising messages that we have become immune to them.