You do have a valid point mate, but remember that LFG is an alternative :) If you want to run dungeons with people you know, thats what guild is for .. or at leat it should be.

From my experience in PUGing, that extends back to TBC, PUGs are like chocolates, you never know what you gonna get :) Sometimes is bad, sometimes good.

Its a close fight between guild groups and LFG, imo the LFG wins. Why ? Cause you can haul ass whenever you feel like and not look back with LFG :))

Well as great as guild runs are, they also are not always possible. I raid in a small'ish 10man guild. Outside of raidtime there are few people on (alot to do with so little level-cap content this expansion, but thats another can of worms).
Back when we were gearing up for raiding we had groups going every night. Now however we have only a couple of people who are bothering to level alts, such as myself. Sure I might get 1 other person in a group, if we happen to log on at the same time, but for the most part I'm having to rely on LFG to gear my alts up.
And there are plenty of great players out there, who make for very positive dungeon runs. But we need the tools to link up and group with these players on a regular basis, instead of the current "Guild group or nothing".

I see arguments like this (the OP) and while they are not without logic or merit, they all seem to be making the assumption that the using the Dungeon Finder to match all 5 people is required and necessary for every single run that you do.

I hear people ask for a "server-preferred/only" option. They already have that for you, it's called the Looking For Group channel and a friends list.

I hear over and over that the DF has weakened communities and destroyed accountability and the need for a good reputation, and yet rarely do I ever see anyone attempt to form up 5 man groups outside of getting 1 to 3 guildies and DF-pugging the rest.

Next time you're going to queue up, try filling the spots the old-fashioned way, by pugging them in trade. No one is, or has ever, forced you to cross-realm pug for your remaining spots. Many tanks would much rather pug with people they actually could see again, and even just getting 3 dps together lessens your chances of getting someone clueless.

As far as I am concerned, the only thing I really use the DF for is picking the random, rarely do I go in missing a spot because it's easy enough to pug people out of trade or ask around. Sure, sometimes they are just as bad as cross-realm pugs, but at least I can hold onto the good ones and make some friends while I'm at it.

@doncristobal
Unfortunately for me that box of choc's is loaded heavily - with COFFEE flavoured choc;s (and no I dont like them!!!)

Also if you seem to prefer pugs to guild runs, your guild runs must suck badly. Generally on my guild runs - theres no squabbling about what bosses to kill - 'you need it - ok lets go' as opposed to 'Tough im not doing that boss cos I need X off boss Y', everyone knows the fight - and even on barely geared alts it goes smoothly. On pugs you find everyone says they know the fight - then stand around going 'WTF do we do now' part way though the fight. Ditto if there a piece of gear needed - in guild groups its quickly passed to who needs it most - in pugs everyone that can needs the piece. Also in guild groups - i have never seen people wear pvp items. In pugs ive been the ONLY one in group NOT wearing at least 2-3 PVP items.

Blizzard should hire you. These are the best ideas I have read on the topic.
We need more tools (filters) to decide what type of group we want to find, plain and simple.

@N-train
I was also going to suggest the same for do-it-yourself same-realm RDF. I would imagine that it would be hard to put a group together if you're DPS, as I've seen DPSers get told to queue solo when they ask in Trade for a group. But if you're a tank, you're bound to find people to do a random with. The only drawback is that you won't get the Luck of the Draw buff without any PUGers, but it's certainly still doable.

The problem with this whole "You can still form groups the old way by finding people in Trade" alternative is that in order for it to atually be a viable alternative, you need to have a sizable portion of the community already doing that.
Sure the facility to use public channels to form groups is still there, but no one does it. Theres no point for a non-tank to go to Trade and start asking for "LF tank/healer and some dps for random hc" because if no one is even really looking for group members there in the first place, its not going to work. Same reason the raid browser failed; no one actually used it, so no one used it.
When I've been at the AH I've watched some poor bastard of a dps sit in Trade begging for a tank or healer for a random, and everytime he gets ignored. As much as we like to say "Do it the old fashioned way if you dont like LFG!" the fact is if no one else is doing that, then its not a viable option.