<?php
function phptemplate_menu_item_link($item, $link_item) {
  if ($item['path'] == '<none>') {
    $attributes['title'] = $link['description'];
//  Here you can specify a '#' link or wathever you want:
//  return '<a'. drupal_attributes($attributes) . 'href="#">'. $item['title'] .'</a>';
    return '<span'. drupal_attributes($attributes) .'>'. $item['title'] .'</span>';
  }
  else {
    return l($item['title'], $link_item['path'], !empty($item['description']) ? array('title' => $item['description']) : array(), isset($item['query']) ? $item['query'] : NULL);
  }
}
?>
<?php
/*
* As a nice extra, we can also add additional help text to the menu item edit page. For that * you will need to implement a very small module that implements form_alter.
* The module itself doesn't need anything more than the following code snippet:
*/
function example_form_alter($form_id, &$form) {
  if ('menu_edit_item_form' == $form_id) {
    $form['path']['#description'] .= ' ' . t('Enter %none to have a menu item that generates no link.', array('%none' => '<none>'));
  }
}
?>

http://drupal.org/node/143322

The following code lets us designate "menu links" that will not actually link anywhere.

Menu items that are not links

template, drupal

PHP