Wowowowowow. Okay, drama that I avoided commenting on, but whatever.
I'll be honest, I've never really appreciated Zenny's sense of humour - cock jokes have never exactly been my idea of comedy - but I've always just ignored it (as in, not paid attention to it, not using the Ignore thing, although I have considered it for a few people.) That said, I also stopped going into DL chat at work for exactly this reason. (I'm always on IRC at work, just never DL chat.) Is it a big deal? Not particularly. If something's bothering me, I'll do what I can to ignore it, and being in chat for a few less hours each day isn't a huge loss.
I definitely agree with Hal's opinions here, but I also agree with Zenny's methodology. Having seen the other topic as well, it's really a shame that it's come to this, especially when I think there are more than enough viable middle-grounds to go on. I definitely agree that things should be toned down more often (and this really needs to be enforced more often - an announcement like this is necessary to show that it'll be enforced too) but I don't think an all-out ban is needed. In other words, I'm pretty much with Hal here, but I agree that it could have been handled a little better.
Thing is, we're all here to argue and debate. I understand that sometimes it'll get a little too personal, but we're all mature enough to: respect each other's opinions, handle a conversation/the occasional joke about sex, and not be over the top about it. (...Aren't we?) Honestly, if people aren't doing that in chat, then the mods need to ensure that they are. If the mods aren't doing that, then someone needs to reconsider why they're mods. Either way, I think some limit is necessary, even if it's not strictly enforced. If people can't handle that, then something's gone wrong.