The proposed implementation timeline has two phases:
Beginning January 23, 2007, ALL persons, including U.S. citizens, traveling by air between the United States and Canada will be required to present a valid passport.
As early as January 1, 2008, ALL persons, including U.S. citizens, traveling between the U.S. and Canada by land or sea (including ferries), may be required to present a valid passport or other documents as determined by the Department of Homeland Security. For all details see:
http://www.state.gov/r/pa/prs/ps/2006/76752.htm
http://www.travel.state.gov/