I just saw a news article indicating the US citizens will need passports when returning from Canada, Mexico, Bermuda and Panama, starting in 2008.
Ordinarily, I might be bothered by regulations like this that increase bureaucracy or restrict travel. In this case, however, I have to say -- you're traveling to a foreign country. Acknowledge that fact, and get a passport.
When I was in grad school, I went to a conference in Canada. I had a passport (for visiting my parents, who were living in the UK at the time), but most of my fellow grad students didn't. One of them got an enormous amount of grief for presenting his drivers license and voter registration card. As I recall, it was from a Canadian official who seemed a bit touchy about Americans who might not consider themselves to be in a foreign country. Everyone returned home convinced of the wisdom of having a passport for any future trips up north.
Besides, passports are fun! Maybe this switch will convince Canadian officials to start stamping them. In my six trips north of the border with my old passport, I only managed to collect one Canadian stamp (in Montreal). My new passport, despite one trip there, has none.