Keywords in the domain name does matter for SEO and can quickly get a new website ranked
We setup a blog a few weeks ago using a domain name that contained all the words describing the blog. The keyphrase had 3 words and most of the results on the first page of Google had a PR2 or PR1 ranking. This blog has no inbound links.
I found that the blog using the domain name containing these 3 keywords got a first page rank in about 1 week. More specifically it appeared in the search engine results UNDER the PR2 sites and above the PR1 sites.
The only other thing worth mentioning is that the Keyphrase was used in the site title as well as the description tags.
The conclusion here is that its easy to get on top of PR1 sites with just a SEO targeted domain name.