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I understand Social Media is becoming an important component for SEO. I'm trying to understand how that can be, considering all the links are nofollow so no link juice is transferred. Might it be that Google does consider nofollow links to some degree?

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Social Media adds to the trustablility and helps diverse your link profile. It's a lot harder to blag social media than it is to blast WordPress blogs with comment links. To be honest nowadays it's not about nofollow, it's about relevancy of content from which you have the link from, and the position of the link... Near the top is better than near the bottom etc. –  bybe Jun 14 at 21:23

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Here is what Google's Matt Cutts had to say about social links:

Facebook and Twitter pages are treated like any other pages in our web index so if something occurs on Twitter or occurs on Facebook and we're able to crawl it, then we can return that in our search results.

Google has said that they do not pass value across nofollow links. So if they treat Twitter and Facebook like normal sites and the links are nofollowed, there would be no value from links on Twitter and Facebook.

It is interesting to note that a high percentage nofollow links have a positive correlation with rankings. It is possible that Google link building targeted towards dofollow only links as spammy and that nofollow links do help balance out a link profile.

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Sounds like you might be confusing "SEO" and "Link Building".

If you are using Twitter well to market, then your Tweets and Twitter account will be listed in the search results and that may lead to sales in the same way as your main website being listed. It is another way to get in front of your audience, and good for SEO in the fact that your brand should appear more often in the listings.

I can imagine that Google probably do use social media links as a signal for a site's popularity, despite the nofollow (they would be daft not to - there is great data available for that), but that is likely to take into account who is sharing your link, eg popular accounts sharing a link looks better than a single account linking to the same website over and over again.

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