Currently the dynamic playlists (scrobbling) is fairly inconsistent and even with a large collection I often find that tracks are not added to the playlist when this option is enabled and when tracks are added they tend to be by the same artist.

The updated last.fm API (http://www.last.fm/api/show?service=319) provides a good way of getting similar tracks and this always gives results for tracks that are in my collection making the option far more useful.