Effective January 8, 2007 the Department of State will begin implementing the first phase of the "Western Hemisphere Travel Initiative." For travel January 8, 2007 and after, you MUST have a passport for all air and sea travel to Canada, Mexico, the Caribbean, Bermuda, and Central and South America. Passports will not be needed for land crossings into Canada and Mexico until January 2008.
Please refer to the Department of State website for additional information: http://travel.state.gov/passport/