A few days ago I pointed out a rather odd fellow I've noted online, and in comments he took exception to what I said (which I thought was actually pretty tame, but what do I know). He made a point of telling me that his first novel has been accepted for publication, presumably as a "So there!" type of thing after I had commented on a highly unprofessional letter he had once written to a magazine editor (which the magazine printed). I asked him which publisher had accepted his work, but he never answered.
But in the midst of his entry for today (no permalinks, but it will have its own link in his sidebar when he supplants it with his next post) it turns out that his publisher is Publish America, which is basically the "next generation" of vanity publishing. Or, as this person calls it, the "Amway of publishing". (Not to disparage Darren on this particular point; he seems to be genuinely aware of what's going on.)
Teresa Nielsen Hayden had a superb post a while back in which she described the evolution of vanity publishing, now that they have moved beyond the standard model of "You pay us and we'll print your book". Reading that article, and the articles that she links in turn, puts me in mind of a joke that the ill-fated Japanese businessman, Mr. Takagi, says in Die Hard: "We [the Japanese] are flexible. Pearl Harbor didn't work out, so we'll get you with tape decks."
Vanity publishing can have its place, in certain scenarios. If you have a book that you know will have a minuscule audience and you have no interest or desire in an audience any larger than that, a vanity house is probably fine -- say, the tale of your family's ancestral immigration to America from Old Europe, or a cookbook collecting the contents of your great-grandmother's recipe box. But that's about it.