Kevin Rose, in what is either a cool move - or dumb move - depending on your perspective, wrote yesterday:
We hear you, and effective immediately we won't delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.
Errr. You just might. Either way too. Piss off enough users and you lose credibility and page views, get sued up the ying-yang and you lose too.
No wonder I heard Kevin mention that he's working on a new web app (the first really separate thing from Digg) during a recent Diggnation episode.
It's a tough call.