I'll admit this is one project I wasn't even aware of. The Wordpress blog just mentioned the sister project BuddyPress, which takes the WP architecture to a new level with a complete social networking platform.
Perhaps complete isn't entirely correct, but BuddyPress 1.0 was just released with a nice set of features. So far BuddyPress supports all the standard social networking type features: profiles, private messaging, friends, groups, forums, etc.
An activity stream appears to give Facebook-like activity updates, and The Wire is a reusable commenting component that can be tied to any bit of content or news. Very cool! It also ties in personal blogs and blog updates, which is something that Wordpress has already got down cold. :)
Status updates and photo albums are slated for this year, but I guess that will all depend on participation and other project demands. Note that BuddyPress requires Wordpress MU (multi-user Wordpress) which may be a little difficult for amateur users.
There is a demo page with some featured sites using the script already. I think the script looks great, but I also dread how many useless new social sites are going to start appearing. Social networking is pointless without any users, but hopefully we'll see some real sites picking this one up.