All of these things are true..i was someone who was hired purely on the basis of network contacts even before the position was opened up. The importance of 'knowing the grapevine' within the workplace cannot be under estimated. Equally huge are the advantages of knowing good bad and ugly place to work for. But I have some experiences with hiring ex collegues you think are good while you move or leave. It is guaranteed to screw up your relationship with ex management or ex bosses (if you think that matters). In one case i knew someone was sued - he knew how much his peers were making, moved to a new place and got them jobs at higher pay so the older company sued him for using confidential information (in this case their salaries). I really don't know what came of that but just an example. Similarly one of my other friends who ran a user group was barked at by management of two companies for spreading bad opinions on them - since she knew lot of places people would come to her for opinions and once or twice she said what she knew on email. Just stuff to watch out for.