There are two categories of deleted domains, IMO.
1) Good names that someone just couldn't afford to keep or had no time to develop and market, and
2) Total junk that were registered by choosing letters from the keyboard at random, it seems.
Most deleted domains I see go through the gutter daily fall under the latter category, unfortunately. It's the world's largest hall of shame.
But I think KC Slim is doing a good job in finding puppies from the first cluster. BedFashion.com is an example of a good pick. It is both conservative and could have a sexual connotation if required. One could market it to Victoria's Secret or to the Sunset Nightgown Experts of Cleveland OH. It's just bad times for the dotcom.