Personally, I think there should be a certain level of stratification and career pathing within any department. This has become a much more common practice at my company recently, with everyone getting a 1, 2, 3, etc... after their title based on a number of things (time with company, experience, education, salary, etc...) which I am happy about.
However, it's important to note that you can't just have the destinations... you need a path to get from point A to point B as well! This I think is where my company has not put as much thought, as it is not clear to anyone how to get from A to B to C at this point (part of the growing pains of adopting a completely new HR/Payroll system and letting the vendor tell them how they should be organizing their company... fun times).
The path doesn't have to be a 4 lane highway with clearly marked exits, but a dirt path with a few sign posts would be nice
Also, I would echo the sentiment that technical people should not be so quick to dismiss the notion of taking a role in management. Granted, there will be those who have a bad experience with the transition (some of whom have posted above), but I think it has less to do with the concept that "most technical people make bad managers", and more to do with the concept that "most management organizations are technically bad" :-P
If you can find a niche in the right spot within management, get yourself a team of good people to lead (junior developers/DBAs), a certain level of autonomy, and have a desire to fix that which is broken, you can do alright. If you are fortunate enough to work at a company that actually invests in their people and technology (instead of half-@$$ing it) then you are even more likely to do well
I have seen it go both ways at the company I work for.
In one scenario, a few good developers (personality faults aside) were put into Supervisor/Manager roles over a team of developers/DBAs. They had the team, they had the autonomy, but they (IMO) did not have the desire to simply make things better/fix things, and were more concerned with exerting control and authority (personality faults). Also, they were in a bad spot from a management perspective as they we're the lynch-pin of a serious corporate power play with some heavy bureaucracy coming down on them. Long story short, the whole department imploded, several of the best developers on that team were fired (wrongfully so IMO), others just up and left the company, and eventually the department was cannibalized by another in the midst of a multi-divisional merger.
However, in the other scenario (at a much lower level in the company mind you) a good developer, with a great personality and a desire to "do the right thang", took on a supervisor role under a director who also wanted to "do the right thang" and support her people and get things done (although very little autonomy as she wants things done her way
heh). He has fostered up several of his analysts to become junior developers and is still going strong years later. To start he didn't have the team, or the autonomy, but he had the desire to fix that which was broken, and his management team supported him well. Sure, he had to deal with the minutia of reviews and time-off approvals, etc... but he still gets to code, and more importantly he gets to be a teacher/mentor to the next generation of technical talent, setting a good example for them, not just showing them how to be a good developer, but how to be a good person as well... how to "do the right thang"