Hi,
Replying to the whole list this time around....
It should at least be reported to the user - otherwise he assumes to have an error-free medium.
Hard-drives have bad blocks, but you don't see them being reported when you format.
Somebody who knows that NAND chips have bad blocks as a normal course of events won't be suprised to see them. People (i.e. end users - not the programmers) who are unaware that NAND chips can have bad blocks will be suprised, so the whole thing about bad blocks being normal now has to be documented.
I think that if a block is marked as bad, then doing an erase should just ignore blocks that already marked bad. However, if a block goes bad as a result of the formatting, then that's worth reporting (although, this is also a fact of life).
I think having a command to list the bad blocks would be useful.