I've read some of the readings for thisPLENK2010 week 2, but I'm not sure that there really is a conflict between these two concepts. In my mind, they are used for different things, but they can also be used in tandem--as witness this very course; housed in the LMS moodle, but all of us free to use whatever we like of it and repurpose it into our own PLE. We also bring our PLEs into play when we participate in a course such as this one.
That also reflects the teaching that I do. While the courses are housed within an LMS--moodle again--and I do provide some internet resources for students to use, the students can also work with the materials presented in a way that suits them. Yes, they do have assignments to do, and the LMS drop-box is very useful for that, but I do provide some starter tools for them to think about how to reflect on their learning process and continue learning in a way that is meaningful for them. These are baby steps for many of these particular students--they are in preparatory courses at AU, and many have limited computer experience, but others are already running.
However, I come back to a point I have made before--intellectual curiosity. Some students just want a grade so that they can get into whatever program they are applying for, but others are interested in the deeper learning process. These are the ones, those with intellectual curiosity, who will go on to develop digital PLEs because they have discovered how useful reflecting on the learning process can be and how much they can grow when they discuss their ideas with others. They're also willing to explore the resources that are available to them and not stick only with the textbook or other instructor provided materials.
So we do need to maintain an LMS within the formal education sphere, but, as we have seen, it is useful beyond that, too. PLEs can be connected to an LMS, and as educators, we should be happy when we see students taking that leap into the future.