I don't think anybody (that isn't a part of the Gmail dev team) knows whether the links in emails affect PR. But yes, PR still matters.

Parsing Google's statements carefully, it seems clear that they do not use mail content for anything other than determining appropriate ads to serve, meaning that they do not take it into account for calculating PageRank. However, the mail content analysis is done is advance, since even Google's monstrous server farms cannot do it in real-time. That means that some kind of "signature" or "profile" or "keyword summary" or your mail is stored by Google, which some people apparently find disconcerting, although I cannot understand why.

Now I've got my own Gmail account. Yay!

I guess I should clarify, Scott... Clearly Google's ranking of sites is still valuable, but my sense is that Larry's original algorhythm for ranking pages is becoming less and less a part of that formula. So I guess it depends what one means by "PageRank" these days.

Anil, I complete agree. Larry's original algorithm is probably just barely there. It's my understanding that PR is an ever-evolving process. Sure, the old, original PR algorithm is now probably meaningless. And he newest variation of the algorithm is flawed in many ways, but many people still optimize their sites to beat it.

But PR as a number, as seen in the IE Google toolbar, is VERY meaningful these days. Most SEOs that I've stumbled upon don't even bother to use the term PageRank. They now just call it PR. It's a popular buzz acronym in their world.