I've bought 2 cars from a friend. One was his (it was given to him), one was one he worked on (a customer's car). The car that was his was great. $75 for a 1966 Olds F-85 330 CID V8 (2 barrel, single exhaust, no A/C), 2 speed automatic. Wonderful car. It needed a battery.
The cutomer car (1986 Olds 98, 3.8 liter, FWD) was OK but became a money pit (mainly because it was driven a *lot*). It finally died at about 350,000 miles. So it wasn't too bad either really.
It's caveat emptor when buying cars, even when buying them from a friend. But it doesn't have to cause problems if the buyer knows what he's getting.
Cheers,
Scott.