Is reviewing papers mandatory?
No, reviewing is not mandatory, it's just good community service.

When I'm soliciting reviews, as an editor or program chair, I would actually much rather have people who don't want to review simply decline to review.  It does mean that I have to search for more reviewers, but it's much preferable to getting low-quality reviews or no review at all.

Moreover, there is always a limit to the amount of service that one should be expected to do.  If you're reviewing a good amount of papers (see discussion in this question about how much is enough), you should feel free to triage. Just be polite when you decline: even with things you don't want to deal with, it's usually better to simply say "I don't have time right now" (true enough) than to offend a person by completing the sentence with something like "... for your crappy journal" or "... for this horribly tedious-looking paper."

Of course, there is always the possibility of encountering an ego-centric jerk on a power-trip, but life is too short to spend all of fearing that you might encounter such.