I think I've lost both of you in the terminology you've used. I'm not sure that either term is quite right, so I'll explain what I thought that each term meant.
I'm used to seeing clustering in reference to the practice of adding some categories on the side of search results that group (or cluster) results in sets that center on specific themes.
Nesting is when a second page from a site might be displayed as an indented result under the first one, with possibly a link to "more pages from the same site" after the abstract about the site.
I'm guessing that you mean limiting the number of results that appear from one domain in response to a search. I agree that I don't want to see more than one or two results from a site that scores well as relevant, even if all those pages may be the most relevant. Chances are that they also might not be what you are searching for, anyway.
I actually like clustering, nesting, and limiting the number of results from a specific site. I'd guess if I could envision the ideal search engine, those would be some of the features I'd like to see.