I use a lot of site for work and fund. Blogs, facebook, twitter, forums, webmail systems, hosted applications - it's a whole lot.
I also work from different computers, using different browsers for different purposes, so have no one single browser to save passwords.
To simplify things, I try to use one password for unimportant things - blogs and forums, one for medium secure things, like Facebook, and one more complex one for high security systems, like online banking.
So when a 'low security' blog or forum does this, it's really annoying:
Just stop it! If I want to use 'password' then I will. If I want to make my password '1' I understand it's not that secure, but I don't care. It's not like I am really bothered if someone manages to hack into an account on a forum I may never visit again.
Finally, for all those who get annoyed with bad web design, have a look at this from the excellent Oatmeal: How to make your Shopping Cart suck less.