Another option for User Generated Content is a plug in for WordPress called WPMU or "Wordpress Multi User".

http://mu.wordpress.org/download/

WPMU lets users create WP blogs on your server/host.

WPMU is also commonly used by blackhatters. They use WPMU to create a bunch of WP blogs, then automate adding content.

I'm not sure how much success they are having. It's probably more a factor of how they do it, than if it works or not...

You also need some good, solid traffic before you can attempt to give away blogs.