Summary
Allowing multiplication by $0$ requires that $0=-0$. That is essentially never a problem. In contrast, even if we permit arithmetic operations with $\infty$, allowing division by $0$ would require that $\infty=-\infty$. This is usually considered unacceptable because it is nonintuitive and conflicts with the way we use the $\infty$ symbol in calculus (and for other reasons). In situations where we accept $\infty=-\infty$, division by $0$ may be allowed.
Full Explanation
Dividing by zero isn't prohibited because it always gives the same answer. There is nothing wrong with an operation that always gives the same answer. It's prohibited because there's always more than one answer or zero answers, and for division to be useful it is typically expected to produce exactly one answer.
Understanding why dividing by zero is really not allowed makes it possible to quickly see why multiplying by zero is allowed, since the problematic situations that arise from trying to divide by zero do not apply to trying to multiply by zero.
When $x\neq0$, "$x/0$" cannot evaluate to anything that is a number in the ordinary arithmetic sense of "number." The product of any number and $0$ is $0$, after all, and thus will fail to equal $x$ when $x\neq0$.
When $x=0$, "$x/0$" can be anything that is a number in the ordinary arithmetic sense of "number." The product of any number and $0$ is $0$, after all.
Allowing infinities as well as finite numbers doesn't actually improve the situation much; by itself, using infinities as though they were numbers doesn't fix the problems that prevent division by zero. Suppose $x/0=\infty$. Since $0=-0$,
$$\frac{x}{0} = \frac{x}{-0} = -\frac{x}{0} = -\infty.$$
Then we have $\infty=-\infty$.
To state the matter intuitively, no matter how many times you add $0$ to $0$, even infinitely many, there's no reason to think the propensity for reaching a larger value is greater than the propensity for reaching a smaller value. $\infty$ sometimes means "a very big positive number" (with $-\infty$ taking on the meaning "a very big negative number"). And $0$ sometimes means "a very small number." But $0$ doesn't specifically mean "a very small positive number."
There are three ways of dealing with the problem that naive division by $0$ to yield $\infty$ makes $\infty=-\infty$ a theorem.
Don't allow dividing by $0$, even when thinking of $\infty$ and $-\infty$ as numbers--for example, even when using the (affinely) extended real line. This is the typical approach. This doesn't require that we stop multiplying by $0$, since while it's often problematic to say $\infty=-\infty$, it's essentially always fine that $0=-0$.
Accept that $\infty=-\infty$. This is the approach of the projective real line and the Riemann sphere.
Reject negative numbers. If there are no negative numbers, then it's meaningful and natural to allow arithmetic operations with $\infty$ while considering $-\infty$ to be meaningless or undefined. Then $0$ can only be approached from the right (i.e., the positive side of the number line) and quotients like $1/0$, like all other quotients in such a system, are guaranteed to be positive if they are defined.
We rarely actually want to divide by $0$. After all, $0/0$ will still be undefined (or will be permitted to be any number), so the goal of being able to divide anything by anything is still not achieved. But we very often want numbers to be able to be negative. And we usually like to distinguish between $\infty$ and $-\infty$ (so that, for example, we can think of a limit that "diverges to infinity" and one that "diverges to negative infinity" as "equaling" distinct infinite values).
A final note: To see the symmetry between division by $0$ requiring $\infty=-\infty$ and multiplication by $0$ requiring $0=-0$, imagine you didn't know $0=-0$ but did know that anything multiplied by $0$ is $0$ (and some other rules of arithmetic). $$0(1) = 0 = 0(-1) = -0.$$
When would one need to multiply by $0$?
Often. Consider some word problems:
$375$ means $5 \times 10^0 + 7 \times 10^1 + 3 \times 10^2$. What does $1001$ mean?
(This should illustrate the ubiquity of multiplying by zero.)
The only things in Sam's closet are 5 bags and the things in the bags. There are no apples in any of the bags. (Or: each bag contains no apples.) How many apples are in Sam's closet?
Mary and Billy are driving forward on a straight road, starting at the "10 miles" highway marker. They arrive side-by-side at the "70 miles" highway marker. In front of them are mile markers with higher values. Mary continues driving at 60 mi/hr, while Billy continues at a speed so slow you may assume he is not moving at all. How far from where they started are Mary and Billy, three hours later? (You may assume all mile markers are accurate.)
Frannie has found that no matter how many times she adds $0$ to itself, she gets $0$ as the sum. In particular, for all the positive integers $n$ she has tried, $0 + 0 + ... + 0$ with $n$ terms has summed to $0$. Is there a general statement about multiplying with $0$ that you could give Frannie, to explain (or characterize) her results?
$1 \neq 2$
. – Wrzlprmft Feb 23 '14 at 08:48