Guys, to expand on John's answer, I'm not ignoring this problem.
I had locked down registrations with a secret question for quite a while, forcing new registrations to email me and ask me for the answer. This worked on eliminating spam registrations, but I got complaints about the process being too difficult. So I removed that and installed Spam-O-Matic a few weeks ago. As John indicated, we started getting reports of users not being able to log in. I removed Spam-O-Matic and replaced with image verification, which is not very effective. At the same time I opened a ticket with our vBulletin host to upgrade to version 4.x, and try Spam-O-Matic (which was also their recommendation). I'm waiting for them to perform this task.
Concurrent to this, I have been trying to delete the bogus users. Version 3.8 does not allow selecting multiple users and deleting - you have to do it one by one. I've developed a script to do this, but it's still a very manual process. At least now I can keep up with the incoming flow.
I will update further when I have more info.