It's not an Olympic welcome, by any stretch.
According to the Associated Press, Chinese authorities "have stopped issuing multiple-entry visas and slowed visa processing in Hong Kong, a major gateway for travel to the mainland, until after the Beijing Olympics, local travel agents said Tuesday."
However, single and double-entry visas are still being issued, which as I understand it, means there shouldn't be problems for most people visiting for the Olympics.
The real impact will be felt by business travelers who travel to China regularly. According to this Wall Street Journal article, a Hong Kong visa agency said the ban on multiple-entry visas would last at least until October 17.
In other Olympics-related travel news, the Chinese government has effectively closed Tibet to tourists by not issuing entry permits after the recent protests in Lhasa and elsewhere in Tibet. This New York Times story has details and an informal rundown of some of the tour operators canceling trips as a result.