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Yes it is delayed again. The passport requirement was first due to phase in at the beginning of 07, but delayed one year by popular demand.
At present you must have either a passport or birth certificate (copies don't count) to get back into the U.S. from Canada or Mexico.
I recently applied for a passport only to have the State Department take posession of my Birth Certificate during the process. The copy of the application form plus receipt are good to get me back into the country until I get my passport. Assuming I have been a good boy and they give me a passport, lol. Oh yea, and my cert back...
As an aside, I have crossed into Canada and back around 200 or so times in the last year and been asked for proof of citizenship exactly 2 times so far by a U.S. customs agent.
Same goes for Canadian customs, 2 times, there is one lady agent that has taken it upon herself to be sure we can get back into the U.S. Never mind that by the time you get to the Canadian customs booths you have left the U.S. anyway, lol.
Silly!
You only need a passport if your FLYING back into the US. You can still drive and boat in just like you always could, at least until 2009...
You must provide proof of citizenship if asked no matter how you are traveling when re-entering the U.S.. In 2009 you will need a passport, unless postponed again.