I've tried dolphin, it's a very mature software package, but with limitations. The free version has adds, and it is not open source. Changing the script to fit your needs is impossible with the free version. This kind of goes against the grain of community software.
Buying the source code cost well over $1000 last time I checked. On the plus side there is a very healthy amount of plug ins and themes available. and if your will to fork out the cash, you can have the source code and no adds.
The smart money these days is on elgg. Elgg is a no cost fully customisable open source community social networking package. It is released under the GNU licencing system. In the core elgg package you receive a fully functional social networking software package. It is then up to you to customise this to your own requirements by installing modular plugins.
Elgg is not as mature as dolphin, but my bet is it will surpass boonex (dolphin) sometime later this year. Already there are well over 500 plugins, and a huge community dedicated to building and improving this project. The growth rate of this community social net working package is huge you can see a sample at our children's site http://fbfkids.com/
and or visit Elgg here http://elgg.org/
or visit boonex dolphin here http://www.boonex.com/products/dolphin/
This is an update
As the comments below state Dolphin has now released their source code. They have also dropped their price to $299.00 Probably in a responce to the competition of Elgg.
Be aware that open source doe not mean free or GNU.
The comment below about stripping out the adds would be tantamount to theft. Most hosting accounts will delete your website if they become aware of this practice without warning.