I just uploaded a new plugin to wpmudev.org that may be useful to you. I know many have complained about this.
It allows people to register for an individual blog using the normal registration process. In WPMU all registrations are forwarded to wp-signup.php, so it is impossible for a visitor to register for only a sub-blog. This plugin overrides WPMU and restores the default WordPress registration page for sub-blogs (sub-blog.domain.com/wp-login.php?action=register).
- Compatible with plugins like Register Plus to control registrations.
- You can edit the default user role sitewide (subscriber, author, etc.).
- You can also control whether users can adjust their own blog registration settings.
- If users can control their own registration settings, a menu with that option appears under Users->User Registrations.
- Does not affect main blog. Registrations there are maintained at wp-signup.php.
Check it out: http://wpmudev.org/project/wpmu-blog-registrations