No, the feature isn't broken, it's just disabled... It's part of "contact lists" in the previous SMF terminology, and members were complaining that it was confusing, so I just disabled everything related to lists (buddies and ignore lists.)
I'm planning to restore functionality before we go beta, but it's not an absolute priority for me.
One of the problems I've been having with ignore lists, is that they're fundamentally not the same as the new contact list system's ignore lists.
The former allows you to hide messages from people you don't like.
The latter allows you to prevent specific people from seeing things you post to a specific contact list, EVEN if this person is part of that list. (e.g. you have a "friend" list, but you don't want to let your mother, who's also a friend, know anything private that you say to your friends, so...)
It's similar to the Facebook system, really. But it's not ignore lists as in SMF, which is why I'm leaving all of this aside for now.