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Here is a simple web service where you can find out which of your twitter friends know each other by using TweetWheel. TweetWheel displays a connection wheel that comprises of all your friends. All you got to do is to hover on a user to see how many of your friends have common friends with you. You can click to see his/her twitter profile page.

However, if you have too many twitter friends, it might take a much longer period than normal.