Backlinks are in constant flux. Some get added while others get removed during the course of a year, most notably those coming from sites that have closed down for one reason or another (like Geocities, AOL member pages, and so on). When this happens, does the link juice that once flowed from them get cut off?
Matt Cutts answers in the affirmative. Google regularly monitors the links that point to the pages in its index to keep the information fresh and relevant, so the absence of an erstwhile link should be detected. Since Geocities no longer exists, then the probability of getting to a desired page through it is nil. Page Rank is meant to be a model of how users randomly search the Web at any given time so it only makes sense to reflect the current situation.
The magnitude of the effect on Page Rank will vary depending on the percentage of backlinks, which have disappeared. Those that were heavily dependent on Geocities might be adversely affected whereas those with more diverse sources of link juice should not feel much of an impact.