(UPDATE 2012 – Be careful with this tactic. Getting loads of unnatural links too fast may invite a GWT Notice of Unnatural Links and eventual penalty. Also be aware that it is probably better to resurrect a dead site as IT WAS when Google last saw it. Check the WAYBACK Machine, for instance.)
Say you see an old site that is ranking in Google for a lot of terms and there is an opportunity to buy that domain and redirect it to your site – will you keep those Google rankings?
I’ve not actually bought someone else’s domain for a long term myself, but I’ve redirected plenty.
The way i see it, Google ranks pages because of the trust of a particular domain it’s on, the links that point to it and the content it has on it. If you keep most of these in tact, buying old domains and redirecting them to similar content shouldn’t be a problem.
Even when redirecting pages, I usually make sure page titles and content are very similar on both pages if I want to keep particular rankings.
Be careful though – Google is under no obligation to redirect domains and transfer rankings, and has said as much, as plenty of folk have been involved in bait and switch strategies. AND I would keep such things under the radar as possible, and I’d also worry about changing the real registrants’ name on the domain in case it’s reset.