In a thread over at SEO Chat named the Hyphen Filter, members discuss the likelihood of a site not ranking well (or being filtered out) based on one's domain name having too many hyphens. An example of a domain name having hyphens in it can be www.domain-domain-domain.com.
Although there is no evidence of a domain name with two or more hyphens being filtered out in any results, it would be a safe bet that those types of URLs can raise a red flag. By having more then two hyphens in a URL a search engine can flag the domain name for review easily.
Who else would put two more more hyphens in a URL? I am of the opinion that having hyphens in a URL is horrible marketing practice. Visit my site at widget hyphen blue hyphen small dot com. The user will never remember to place the hyphens in the URL and most likely go to your competitor.
Currently, I see no evidence of any search engine filtering out hyphenated domain names. But I can see the search engines using this as an easy way to spot and flag some sites.