From The U.S. Department of State website:

Please Note: By January 1, 2008, all travelers to and from Canada, Mexico, Bermuda, the Caribbean and Panama will be required to have a passport or other secure, accepted document to enter or re-enter the U.S. This requirement is being implemented in two phases:


On December 31, 2006, the requirement applies to all air and sea travel.
On December 31, 2007, the requirement applies to all land border crossings, in addition to air and sea travel.
All U.S. citizens, regardless of age, will need a passport or other secure, accepted document to enter or return to the U.S.