Nelson reminded me of a thought I had a few weeks ago: the adoption of ad blocking plugins and software is like the adoption of the Firefox browser. It was partly due to popups and a general lack of control over the content from a browser that wasn't progressing.
On a discussion board I'm on I watched someone help another user install ad blocking software and explain how to keep it updated. A few years ago the early tech adopters were doing this for IE users moving to Firefox. It's why I am so wary of behavioral and context sensitive advertising. You won't be able to match much if someone has k-lined your ad server, and if you force someone to that extreme, then you've lost them from ever coming back.
I personally find self-selected advertising pretty interesting. The sort of advertising where people can define filters for what they'll accept in exchange for the content. No personal information beyond preference needs to be recorded and opting out of the program is as simple as clearing your cookie. Ideally you'll end up creating fertile advertising spheres that will be attractive to advertisers because they can be assured of a receptive audience. The fire and forget Ad Sense model will be less attractive to people who want to know where their ad is going and why.
I've thought about this problem a lot. I've built prototypes and have spent a fair amount of time every weekend working on the problem simply for my own satisfaction. I like good ads. I like when advertising does what it's supposed to do, and I hate when it needs a dancing lady with the words "YO, UPGRADE YOUR MORTGAGE, YO" to do it.
I will never install an ad blocker because I know it directly harms these small and medium publishers who are trying to make a living. I won't give up on advertising simply because it offends me—just the opposite: because it offends me I want to fix it.