in addition, there is an advantage for an Ultrapeer to set the declared speed as modem: you avoid searches and uploads to all those users who only want to download from"fast" hosts (trick to avoid newbie floods).

Secondly, the scale of the upload bandwidth throttle changes depending on the speed chosen in the preferences, so if you want to throttle uploads to a small amount, choosing "modem" is a valid choice.

Thirdly, an ultrapeer already is using up about 8 (or more) KB/s just with traffic, and on a 128 bps DSL connection there isn't a lot let over for file transfers. Since the confirmed speed of a host (shows up as black entry in searches) is figured by actual transfers, many slow transfers will show up as "modem" speeds in other's search results.

Bottom line--sometimes those "modem" hosts are working very hard and contributing a great deal to the network