I'll have to add this as a task for us to investigate. We already can auto-generate a password for users if the Automatic registration flow is enabled. However, that doesn't work with VM 1.x (the only extension we integrate with that it doesn't work with). I can see the benefit of hiding the password on that form, if desired, for a few reasons though.
I've take note of it in our feature tracker, but I can't guarantee how long it will take. If you feel it's required right now, we can try to bump it up. The only other thought is to change your language files to better clarify some of the text on that page for why the user is there.
Hope that helps,
Alex
Removing password field in Virtuemart
