Blizzard does the same as Paypal, I noticed: not allowing pasting of passwords when changing passwords, but you can paste it when logging in. Thankfully, I noticed yesterday, Starcraft II allows me to paste the password in-game! That was a nice surprise. Looks like they've given their policy some thought, at least.
The only reason I can think of is perhaps reducing the risk of people not knowing their password when accidentally pasting the wrong thing in the password fields. It's possible that your clipboard contains something else since you copied your password. Which is understandable, but it seems to me like they're replacing one problem with another whereby everybody gets to deal with the new one, whereas the old problem could be circumvented with a password-forgotten function that everybody has anyway.
Yeah, not a big fan of this practice all in all.