I'm not sure if Amazon.com keeps making these controversial decisions due to some inherent flaw (sort of like the classic input-output error), or if it's intentional to keep them in the news, even if it means protests and losing customers.
From Amazon.com itself, through Mark Probst's blog: "In consideration of our entire customer base, we exclude "adult" material from appearing in some searches and best seller lists. Since these lists are generated using sales ranks, adult materials must also be excluded from that feature."
There are lengthier explanations and open letters making thier way around Twitter including:
BookSquare: Open Letter to Amazon Regarding Recent Policy Changes and
Publishing Talk: An Open Letter to Jeff Bezos
Makes you wonder what's next. If sex is taboo, maybe religion and politics are next.
UPDATE 4/13/09: Amazon.com claims it was all an error.