It's the same with MSN, but if, for instance, someone is always online every day and suddenly didn't appear online for quite some time I would assume I had been blocked. And, as has been mentioned, if there are mutual contacts in a group and you contact one but block another it could be mentioned in passing and hurt feelings.
I must admit that I have blocked some people, including an ex friend who could fill up every EH forum with little effort. I'd say keep it for extremes of situations or use sparingly myself.