Absolutely there needs to be restrictions on who can donate blood.
If you want the safest possible product to be available for yourself or a loved one, would you want to give someone with some form or other of hepatitis to donate to you? What about people who have HIV? What about people who have STDs like syphillis or gonorrhea?
In Canada :
People from high risk areas of Africa are automatically excluded due to high rates of HIV infection.
People from the UK are automatically excluded due to high rates of Creutzfeldt-Jakob Disease (aka Mad Cow Disease), as are people who have spent more than 3 months total travelling in the UK.
Homosexual males and women who have had sex with a homosexual male are automatically excluded due to high rates of HIV infection.
IV drug users are automatically excluded due to high rates of HIV and hepatitis infection.
People who have traded sex for money or drugs are automatically excluded due to high rates of HIV and hepatitis infection, as well as gonorrhea and syphillis infection.
People who have had cancer are automatically excluded. They may not be a risk due to infection, but donating itself may be a risk to the donor, should their cancer come back.
Women who are pregnant, have had a baby, miscarriage or therapeutic abortion are unable to donate for 6 months after the event. Their bodies need time to recuperate.
People who have had surgery are not allowed to donate for 6 months after their surgery, to allow their bodies to recuperate fully.
People who have had tattoos or piercings are not allowed to donate for 6 months. Despite very strict standards of hygiene in reputable shops, some people still get tattoos and piercings in unsafe ways, which carries a high risk of contracting hepatitis C.
People who have spent more than 48 hours in jail are not allowed to donate. I can't imagine what happens once you've been in jail for 49 hours, but it doesn't sound good.
Think about the type of person who might need a blood transfusion. No otherwise healthy person in their right mind is going to walk into a hospital and say "I feel a little out of sorts today. How about a couple of shots of O negative to perk me up?" A person who needs a transfusion is usually quite symptomatic with weakness, shortness of breath, and unable to function normally. They may have had an accident where a lot of blood was lost, or they developed anemia through malnutrition or possibly through unusually excessive menstrual bleeding. They are compromised, and to knowingly transfuse them with something that could make them worse instead of better would be irresponsible.