I fly Delta for business and I've seen overbooking occur from time to time. Airlines do this because they figure a certain percentage of people no show on flights. However, every time this happens they announce before boarding and offer $500, a hotel if needed, and next available flight. If no one takes voluntarily it there is generally a tiered system for tickets so some people know going in their seat is the most likely to be "bumped". Friend of mine flies this way and has endured multiple "bumps" or even ruined trips in attempt to save money and has received $500 towards other flights. He grumbles, but he has never been on the flight and then asked to leave at random.
I'd say every airline should view this as an example of how not to handle this situation. Bad news sucks and customers are never going to be happy about it, but heading off bad news is the sign of good management to mitigate damage.
