The JIRA instance on jira.codehaus.org uses CAPTCHA for signup. Today I tried to help a user of GeoServer to open an account, we made soft of 15 attempts in a row, most of the time the image was not readable. Removing "circles" from the chars makes most of the time unreadable to a human too, as significant part of the char are not visible anymore.
Couple that with a few non matching passwords and you have a recipe for frustration.