A concrete example would be writing an especially glowing review of the new Kindle because you have a vested stake in people buying them. Or, perhaps, NOT writing a glowing review because you fear it will be perceived as shilling for affiliate cash.
It's the reason why most reputable newspapers do not allow their ad sales staff to communicate with the editorial staff about content.
In fact On The Media recently did a story about the Washington Post struggling with whether or not to include Amazon affiliate links in its book reviews. I think it presents both sides of the argument: http://www.onthemedia.org/2011/nov/11/web-links-money-makers...
I'd like to think that a regular reader of a publication should be able to figure out if that publication is shilling when it should be objective. On my Nine Inch Nails site, when I link to Amazon, it's about a CD/Vinyl/MP3 album that just came out, and I think that makes sense. If I posted about some shitty Trent Reznor bio and mentioned the linkKindle Version/link available for the linkKindle/link I fully expect my readers to flog me. And I'm not saying that every blog out there pays attention to editorial ethics the way I feel I do, and I've given people a hard time about sneaky affiliate links too. But I think that there is a 'right' way to use them.
When I started my site a dozen years ago, I wanted it to be a place people went to read NIN news. Money wasn't part of the equation. But if you're already linking to sites that have affiliate programs, you'd be foolish not to take advantage of those affiliate programs.
If someone writes a meaningful glowing review of the new Kindle, then there should be information and details in the content of the writing that explains why they think it is so great. If there is no such information in the article, then the article probably isn't very helpful, and neither the presence nor absence of affiliate links will change that.
But what if it is an awful fluffy review written for the express purpose of making an affiliate sale? Is this wrong, per se? If something in the article either directly or indirectly prompts a reader to click on the link and they make the purchase, then what harm has been done?
Newspapers likely disallow such practices in order to maintain journalistic integrity, but a blog author who is writing posts on purpose to sell things is probably not interested in maintaining journalistic integrity. The blog author is just interested in selling stuff. Maybe the blog posts are well-written and interesting, or maybe they are not. If they are not, then readers who care principally about content will likely avoid the blog on the lack of merit of the content itself.
A product review is close to useless if you have no trust in its author. The crux of a review is the author's opinion about something. Whatever verifiable facts are contained in the review are still only those facts the author chooses to highlight. Consider: if authorship doesn't matter, why is a review different from a press release? In short, a review cannot speak for itself because context matters.
Let's set aside the ambiguous case of adding affiliate links and talk about out-and-out payola. If a blogger takes a secret cash payment to write a false product review, then I believe that is dishonest and wrong no matter how well written or useful the review may be. (And not to confuse what's legal with what's ethical, but taking cash for reviews on your blog might even be illegal.)
You might be in a position to turn down free money for hypothetical reasons, but I'm not.