I see the domain layer & the service layer a little differently.
Basically anything related to the problem domain, e.g. entities, value objects & the business rules related to them should go into the domain layer. This allows you to express domain concepts including business rules through objects.
Anything related to the application (technical stuff) like transaction management, message sending, logging etc should not be in the service layer (sometimes application layer). This layer uses the domain layer to call the business rules. This layer can also be used to integrate with other applications.
I think it is very important to make a clear separation between the two, after all they are two completely different things when you think about it. One is related to technical related implementation specific stuff, and the other is related directly to the problem domain in which the application is trying to solve.
Without this separation it becomes too difficult to extend a system that has complex business rules and thus eliminates any of the benefits of using OOP.
Check out http://www.domaindrivendesign.org/ for detailed information about why domain models are so important.