Yes, a "-" is the same as a character so you are diluting your in url strength with the "-".

Most people also claim that human users dislike the "-" however it has been proven that they are easier to read.

i-am-easier-to-read.com against iameasiertoread.com

Your page rank is not effected at all from a "-" or any other attribute of the name itself.

My rule when buying domain names is this:

Preference: .com for anything and everything, especially if I might one day want to sell the domain name. Then .org which is another nice domain if your content is in any way factual.

Length: The shorter the better. Some people try to cram as many terms into the domain as possible and even repeat the keyterm. Like, hotdogshotdogs.com which is a nice idea as it works out that the % of the term in the domain name for hotdogs is 100% even when you did not manage to get hotdogs.com which like most domain names is impossible.

Here is my list of tools that I use when domain grabbing:

DomainTools.com
Who.is
Instant Domain Search
Ajax Whois
Psychic Whois
BustAName
NameBoy
Xona Domain Hacks
DomainsBot
MakeWords
Banned Domain Checker


Hope this helps. Once you get your domain and site up and running do not forget to get it started quickly by posting a number of articles on iAricle.org this is a great free tool which gets the domain listed in Google, PR rank and inbound links all in one go.

Even if dashes hamper SEO stick to dashes .
Dashes makes the domain name more readable .

Wow thanks ezmoo and vinug for your responses. This forum is so good, such great members.

Is a domain name important in SEO? I've heard it accounts for merely 2% of what is considered for SERP.

In my experience, if you can grab your keyword with or without dashes as your domain name, it has seemed that your SERP does indeed get a temporary SERP boost until Google can gather data about your site. If your content and traffic behavior live up to the domain name the SERP boost will hold. If it doesn't, it won't.

Dashes help search engines see the keywords in a domain. If they all run together the search engines can't always distinguish the keywords.