I know lots of people hate hearing "because Joel said so". I'm not going to say that. What I am going to say is that Joel Spolsky has some pretty good reasons for not doing quotations in software on his site, and I think they apply pretty well to PM as well. He starts from the arguments of Dave Winer, and continues from there.

Quoting being supported in the software does help in some situations. It also leads to people quoting more and writing responses which do not stand as well on their own. I'm not sure which side of the fence I'm on, but if forced to choose I'd probably go with ad-hoc quoting over supporting it in software.