such as phentermine.play-777.com, but also a mutlitude of others, why is this happening, is it some misuse of my site or for some other reason.

why is this and what can i do to stop it.

You have visible referrer block and links from you site can (in theory) increase PageRank of spamvertized this way sites.
Just use SiteStats 0.6 (it has, as I see only one small glitch with resetting top refers data), enable "Referer SPAM Control" in preferences (Reflect is nice, and can be slightly non-elegant only in case of your multihomed site) and add abusive url (regex supported) into the list of banned referrers) in "Referers Database"