Incest is either viewed as good or bad for the same reasons. Blood relatives having children. In cultures where it is good, it is preserving a pure blood line. In cultures where it is bad, it is going against nature. Also, it depends on the relation. Brother and sister, in a society where incest is bad, is viewed as far better than parent and child. In fact on case we think was cited earlier in the thread (or on wikipedia) was a brother sister couple in Europe that have made their nation question the law on incest. Had it been parent-child, there would have been a harsher reaction.
In roleplaying though, incest is a trait, a hook, or a random event (more on that). As a trait, a character has a non-platonic relationship with a relative, normally a sibling in fantasy. As a hook, a character has had a child with a relative (brother and sister or father and daughter in most cases) and the child is of enough importance to merit adventure. As a random event, it normally does not involve the PCs and is just weird or disturbing. If you are cruel enough and want to stop a sex-obsess player, that young barmaid he just slept with was his sister (he just didn't know it). Incest as a random event should be kept to a minimum. Incest as a trait or hook can be used within the players limits. Incest is a hard subject and should be handled delicately to avoid offending any players.