BlackHat had a fairly technical presentation on weaknesses of the Microsoft fingerprint reader, but it boils down to the old problem that someone can potentially capture the fingerprint data and replay it instead of needing a finger.

Techweb has a nice write-up of the different perspectives on the BlackHat presentation.

I have been testing one of the readers myself for some time now and just stopped using it because of a number of inconveniences (ironically it’s billed a “convenience only” device). This news puts the nail in the coffin, at least until a new revision comes out.