It seems like the latest thing in web hosting is "multiple domain accounts" where web hosting companies allow you to host multiple domains (some even do unlimited) under the same account. These differ from reseller accounts in that there is a single login which manages multiple domains. A reseller can set up multiple logins for each account.

Although I see why this is attractive to a lot of people who host multiple sites, I am curious as to the downside of allowing this.

The main thing I can think of is that with a single account name, and multiple sites, you increase your risk of getting ALL of your sites hacked if there is a single insecure script on one of your sites. If you have a separate account, the files all have different owners so this is prevented.

So speaking to other web hosts, do you think it is a good idea to offer multi-domain accounts?

Depends on the market you're after. We use cPanel which calls that addon domains. We do allow a small number of addon domains, but among our customers with multiple domains, most of them also use multiple accounts. They prefer each one to have its own cPanel. The only ones who do use it are all personal accounts. Most businesses only have the one site, and if they had more than one, they tend to prefer to keep them separate.