Hi KendallP,
Yes, there are diodes between all cells. I did do some quickie tests in the summer of 2009 that showed I did not loose the entire panel when one cell was totally shaded. However, Salvo has suggested that partial shading of a single cell is worse than total shading. If I understand what he meant (and often I don't)--the diode fails to "lock out" the cell under those circumstances which results in the panel outputting at the level of the "weakest" cell.
Here is an extreme example. Put a six volt eight amp motorcycle battery in series with a six volt 400 amp fork lift battery. Current will be limited by the weakest (smallest) cell, so output would be 8 amps.
It is always better to have zero shading. I do get 7 amps in leafy shade at solar noon if the battery bank is "hungry".