Guestbooks are a little bit outdated and have instead been replaced by the more advanced comment technology and forum technoloy.

A guestbook is a page where visitors can leave their name and comment. Today, this has been replaced by more targeted uses:
- Nested Page Comments: this allows visitors to comment on the content of a particular page, or comment on each other's comments.
- Forum: this allows visitors to pick a specific subject from all the topics the forum offers, and engage in a dialogue with other users about the topic.

A guestbook doesn't offer this targetedness. Instead, it allows visitors to discuss the website or topic as a whole on one dedicated page.

A guestbook can work really well on a simple websites for churches, weddings, exhibitions and small museums. It can also be used as a way to collect testimonials on a sole-contractor site, or B&B site, although a dedicated testimonials page would be more appropriate.

My impression of online guestbooks is that they're not really in fashion any more, but I think they may be useful and kind of novel for the sites mentioned above in the last paragraph.

I have paid attention to a feature at some forums that shows the last few comments of people commenting on threads.

I just asked a related question to this. The odd thing to me is that on some sites, the guestbooks are still going strong and even acts as a draw. It seems to have a different audience.

it doesn't do any harm.. depends what sort of site you have really..

Some people like being able to leave a little message without having to become a member or give up personal details..

I suppose on some sites and depending on the type of crowd you're drawing, a process of replacing certain words may be a good thing to have going.

I guess I can see it being a popular feature.

I'm not really sure why a guest book would be preferable over a blog, but maybe it's because it's not as visible as a rule. That's about the only thing I can think of.