Their name actually says it all...they are just a bunch of yahoos.
If y! indicates that the max length of a password is 32 characters it wouldn't be such a big deal. A password of 32 characters will take quite some time to brute-force (assuming they take precautions such as hashing and salting). But I am not surprised if they don't mention this limit. For a company that has/had so much to do with communicating, they sure don't do enough of that themselves.
y! sure has fallen...