The other day the outgoing and incoming executives of the Editors' Association of Canada, B.C. Branch had our transition meeting. (I'm one of the outgoings.) As we chatted, the topic of saying no came up—most of us are freelance editors, and in each of our careers there come potential clients whom we must turn down. That's a good thing when we're just too busy to take more work, and at the very least an ambivalent thing when we need the work, but the client just feels wrong for whatever reason.
Web usability company 37signals recently turned down a big contract because of contract terms they and the client couldn't come to an agreement about. I admire them for that, and expect they'll get more work out of sticking to their principles than if they had given in.