These probably do get close at doing what you're looking for. All of these solutions are well-suited for social networking type of sites.
a) [WordPress MU combined with [URL="http://buddypress.org/"]BuddyPress](http://mu.wordpress.org/).
That combination allows you to give your users the ability to setup their own blogs.
You can also let your users create their own blogs.
Not sure about the multiple blog options here, but worth a look as well.