While it is true that LOC is a terrible way to use for evaluating a program, it can be an extremely valuable tool (in the hands of an experienced programmer who follows a fairly structured PSP) for predicting the development time for a program.
As for Rollo's statement about the coders who randomly delete comments and spaces to get LOC down, I solve this problem myself by counting "logical lines of code" (which you must define before you begin counting) and by keeping a separate "lines of documentation" count.
Unfortunately, my ratio of LOC to LOD would, in some cases, cause a floating exception in a program that tried to evaluate the ratio. This is a bad thing.