The problem I've found is that once I unfriend someone, they'll start seeing me pop up in the "friend suggestion" sidebar. So, while Facebook doesn't directly tell them, it pretty much lets them know at some point. My solution is to create a "limited" friends list for people I don't know really well that has permissions for posting to walls, seeing my photos etc. restricted. Then when I get a friend request, I decide at that point if they should be part of that group. Then I use the "hide" option on the newsfeed so their status updates and many, many application announcements don't show up.
Thanks for the tip, Sasseefrass!