They did...but the one or two conferences you attend a year as a student isn't even close to what I'd call "networking". And frankly, that kind of interaction doesn't get you closer to a job, and it doesn't matter even a little bit for getting a professorship, unless you're giving a major talk (which, in all likelihood, you aren't).

The best networking I did in grad school was attending startup-related events. That got me my first paid gig, which led to greater street cred as a developer. Attending events held by the career center was a close second, because those led to interviews. Everything else was fluff.

Although PhD is a lot of work, its non-fixed schedule allows for some kind of freedom that you can use for networking. For example, PhD is a great time to be involved with open source projects where you can significantly contribute to, which can bring a lot of valuable opportunities if you're good at it and the project fills a marketable niche.

I know that my PhD completely changes the nature of jobs I can hope to get - not really because of what I learned directly at my PhD, but for everything else.

Also seems odd that there were no collaborations or internships with businesses. People in my lab have interned in research labs at IBM, AT&T, and Telefonica. Additionally, we've worked on projects with people from Google, Akamai, Vuze, and Skype. These seem like pretty decent opportunities to establish contacts and fairly typical (at least in CS). On top of that we've also collaborated with researchers at other universities.

Sure the majority amount of my/our time is spend sitting and working in the lab, but going to a few conferences per year, doing an internship most summers, and having weekly meetings with other researchers adds up to establishing a lot of contacts in the research community that I wouldn't have without graduate school.

This very much depends on what field you're in. You'd be hard pressed to find business internships in astrophysics.