A lot of people find hashtags on Twitter annoying. However, they exist because nature abhors a void. They provide something Twitter lacks: categorization. If hashtags also carried with them enforceable privacy restrictions, they would become very powerful.
Clay Shirky loves LiveJournal because LiveJournal's flexible, user-defined privacy restrictions allow you to express the simple, unavoidable reality that you often do not want all the same people to see all the same things. In real life you share some information with some friends and other information with others. The things you publish on the Internet should not be readable to all possible people who might find you there.
Twitter's already essential to tons of people. Imagine if you could tweet at varying levels of publicity. If Twitter had this additional expressive capacity, it would become more essential to more people.
Likewise, think how useful it would be if you could tune into only some information emanating from a given user. My mom follows me on Twitter. She doesn't give a damn what I think about RSpec, but if I'm thinking of getting a puppy, she'll want to know every possible detail. Someone like David Chelimsky might take the opposite point of view. Dave should be able to say yes to #rspec and no to #puppy, and my mom should be able to do the inverse.
(I'm sure Dave loves puppies too, of course. Everybody loves puppies. It's just an example.)