Passport rules have been relaxed for air travel to Canada, Mexico, the Caribbean, and Bermuda. My understanding is that you can still travel to Canada and Mexico by sea or by car *without* a passport until January of 2008. However given the slowdowns, bottlenecks, and government confusion it's a very good idea for anybody who thinks they might be heading out of the country over the next few years to .... get a passport. Go to the official US passport site HERE for more information about getting a passport.
From US Passport Official Website:
U.S. citizens traveling to Canada, Mexico, the Caribbean, and Bermuda who have applied for but not yet received passports can nevertheless temporarily enter and depart from the United States by air with a government issued photo identification and Department of State official proof of application for a passport through September 30, 2007
