Question: Recently there has been a lot of hype about URL Shortening. I guess some URL Shortening services even offer tracking stats. But, doesn't adding one more level of look-up to the original URL affect page ranking in any way? Just curious to know.

Answer: 
IT depends upon the implementation from the URL shortener service. If they use HTTP 301 and/ or HTTP 302 in their redirects then Google are quite good in interpreting these correctly in accordance to Page Rank. However other parameters might be affected by URL shortening.

Most Search Engines uses anchor text and URL texts as a parameter to what to give hits for for a specific URL. And if the URL changes from <http://example.com/some-article-about-C> to <http://example.com/234432> then obviously the first one carries more information for the search engine which will make it perform better for "article" and "c"...
Well, I can tell you one thing that *won't* affect your PageRank - URL shorteners using DNS.

The vast majority of URL shorteners use clientside redirection - either via scripting/meta-refresh, or via frames. Those might affect your ranking as they change what Google sees - you never know. Examples are anything from [Dot.tk](http://dot.tk) to [PopNIC](http://www.popnic.com/), [Smartdots](http://smartdots.com), [JoyNIC](http://www.joynic.com/), [HomeNIC](http://www.homenic.com/), [EuropNIC](http://www.europnic.com), [Tipdots](http://www.tipdots.com), [DuoNIC](http://duonic.com), [UnoNIC](http://www.unonic.com/), [Cydots](http://www.cydots.com/), [FreeNIC](http://freenic.at), [Mediadots](http://mediadots.com), [Ulimit](http://ulimit.com), [kurzURL](http://kurzurl.de), [co.nr](http://co.nr) and [de.be](http://nic.de.be)/[de.vu](http://nic.de.vu)/[ch.vu](http://nic.ch.vu).

A few services are using proper DNS for forwarding, though. Those include [Afraid.org](http://afraid.org), [co.cc](http://www.co.cc/), [No-ip](http://no-ip.com) and [Da.ru](http://da.ru). This is fully transparent to visitors and spiders, so you can be sure it doesn't affect your rank.