I just read a book review written by a friend and departmental colleague of the book's author. Guess what? The review was highly positive. Important book, should get wide readership, etc. etc. I can recall reading some reviews over the years by reviewers who were sworn enemies of the book's author. Guess what? The reviews were quite negative. Is it acceptable to review books by one's friends or enemies?
In my view, neither close colleagues/friends of an author, nor dedicated enemies, should review an author's books. The situation is not always cut and dried, and sometimes requires thought.
I was once asked by a journal to review a book written by my then-colleague Marilyn Masson; I refused because of our close professional relationship and friendship. But what about now? We haven't been departmental colleagues for five years. We are still friends, but not close buddies and we don't have any current joint projects. I think I would still decline reviewing her books. Even if I could convince myself that I could write an objective review, others might feel that I am biased. What if I felt the book was the best thing ever published and gave it a rave review? Others might discount my review on the basis of possible bias. "Oh, that's just Smith gushing over work by his pal Masson." I think it's important to avoid giving the appearance of bias.
To me, the key factor in deciding whether to review a book is whether there is a close personal relationship, or strong personal feelings (positive or negative) toward the author. I have reviewed books by people I know, and in at least one case my initial impression was that I would like the book and the research it describes. I have also reviewed books in cases where I strongly suspected that I would not like the book. But I did not have strong personal feelings about those authors, and I felt that I could (and did) provide objective reviews.
If the criterion for determining an appropriate reviewer is the existence of personal feelings or personal relationships (assuming that the area of competence fits), then it is up the the individual scholar to make this decision. Book review editors should (and do) try to avoid potential bias, but they tend to be busy and may not know all of the relevant personal relationships (or even departmental affiliations). When I was book review editor for Latin American Antiquity, I once unknowingly sent a book to the author's worst enemy. This person submitted a review that was mostly personal vitriol, quite unprofessional. It is the only book review I rejected in my 3 years as editor. When I expressed my puzzlement to a colleague, he burst into laughter, saying, "Didn't you know about their history?"
This issue seems pretty tame in comparison to some cases I've come across. For example, I've seen the same book reviewed by the same reviewer in multiple journals, clearly a no-no in most statement of professional practice. And when I was a grad student I caused a stir by criticizing the decision of a major journal to allow a (highly positive) review by someone whose name was listed on the cover of the book as a contributor. And for graduate students, there is a whole set of issues about whether students should be allowed to review books, and whether they should accept if offered the chance to write a book review.
But please avoid writing reviews of books by your good friends and your enemies.