Email validation and admin approval here after running them through the SMF dupe account checker. If hotmail filters your emails as spam, then you need to fix your mailserver...
Michelle - I don't know how much spam I would get with e-mail verification turned on because I have never done it before. But it's not a problem with it off, especially with reCAPTCHA and the new vBulletin ask a question system (can't even think of the name now, so tired). It's worth keeping it off, in my opinion. It's a real turn on when I don't need to do this and can just post.
I always require e-mail verification. This is on all my forums, even when they were just starting out. Only one of my sites requires admin verification. This was a site that, for whatever reason, was targeted heavily by spammers (it's pretty dead otherwise). I have set up an open-ended question that has to be answered related to the forum's topic during registration. It's not one of those question/answer anti-spam things. I ask them to describe an experience or why they're interested in joining. It's worked well, and almost no more spammers are registering.
Of course. But then, your site will be targeted for spammers. I mean, I've come across sites that don't require validation, but, I still think it's imperative to have. Just to have the reassurance that members are actually legit humans. --For different folks.
I manually approve at Setsou Design. Something went wrong with e-mail verification. Otherwise, that would be turned on.