I work for one of the top executive search companies in the world and LinkedIn is an indispensable tool.
In the past, headhunting was very much about who you knew, the company's own database, thrashing through newsfeeds, list of associations, etc., and a lot of cold calling. LinkedIn has, in a very short time, topped them all.
LinkedIn provides a headhunter with a database that updates itself and that constantly grows without much effort (each connection who adds a connection "expands" my network). It also gives direct access to top executives and allows the headhunter to read the executive's profile before speaking with him/her.
Through the eyes of the user, indeed, the entry price is a little loss of privacy, but I believe the gains outweigh the losses. A LinkedIn user enters the radar screen of headhunters, allows you to stay in touch with former colleagues and friends, and, who knows?!,
lands you a job.