Mary McKnight mentioned this idea in a comment the other day and it deserves a good debate. Her opinion is extremely biased because she sells a product that depends on adoption of specifically this strategy. I also promote a product that doesn't depend on this strategy, but it also doesn't rull out seamless integration with a site to provide either approach; seamless integration or a "splintered" solution. So there's my bias. ;-)
To be blunt - the word "huge" is big. A huge mistake - hardly. More important - the decision deserves some context before making such broad and sweeping arguments. Depending on a context, it may not be a mistake to use a blog in parallel to your web site.
Imagine your company has five divisions; three have ecommerce functions, and two are customer focused. Should the web site *be* the blogsite? Or should the blogsite *be* the website? You have to decide what the business requirements are and determine the best strategy to meet your business and marketing objectives before attempting to answer this question. It certainly makes sense to integrate all web functions in a way that meet business objectives, but you don't have to do that physically to achieve the look, feel, and functionality that two physical environments are actually one virtual environment. Indeed - this what Web 2.0 and web services are all about - small pieces, loosely coupled.
Consider...
We have a client - a division of AOL - they have a blogsite and a website. Can you tell by looking at the website and the blogsite that these are two different servers and two different content environments physically located in multiple cities? This division of AOL decided that the two environments needed to function as a unified application. They also recognized that the architectural advantages of a blog are different from the architectural advantages of a content management system - attempting to write one application to play the roles of these two distinct content models put each model at risk; lowest common denominators aren't always the ideal approach.
Would you (or did you) ever consider putting your website into a conversational forum technology? When forums became popular, I didn't hear anyone saying - splintering the forum from main site was a huge mistake. So why would we assume that splintering a weblog from a primary domain is a huge mistake?
Blogs have become popular in business marketing because they represent a departure from the steril, brightly lit, and very manicured message that marketing and ecommerce functions typically provide. People enjoy business blogs because they feel that they are getting something they cannot get from the web site - honest, highly personable information communicated at a human level. If you blend your blogsite into your website, you run the risk of losing the opportunity to connect with prospects at this personal level.
Many companies have thought about this issue deeply and most have concluded that a web site is [typically] ideal as the voice of marketing and sales, while a blogsite is the voice of the people of the business. In consistent fashion, a forum is the voice of the customer and blog comments may also be seen as another way to listen to customers, prospects and even your greatest enemies. ;-) As such, it's not uncommon for companies to compartmentalize functional areas across multiple sub-domains while leveraging each applications architectural advantages.
Take some time to observe what smart companies like Microsoft, Intel, and Macromedia are doing. Then factor in your own business objectives for blogging and how you want to leverage blogs to the best advantage.
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