I have a website planned that will depend heavily on affiliate
marketing.  I see ads around for affiliate cloaking generators that mask
and encode your links so they don't get hijacked.  Do they have any
value?  How rampant is this problem?

As some one who is an affiliate we have not experienced this issue. To
avoid having this happen to us we try to work with establish and
trusted affiliate systems.

For example, if a programme was on CCBill we would feel a lot safer
and inclinded to promote it then say a programme run on an inhouse
developed script.

If you were to be doing your own script or were wanting to attract new
affiliates then this type of security would add great value to your
offer to new affiliates.

This advice is free from me - Paul @ www.smithsmedia.co.uk