From the Digg front-page: Passclicks is a new way to logon to websites without users having to remember a password or passphrase. You can set (or reset) your password by clicking on five distinct areas of the image. Then logon by clicking those same five points with a 7-pixel margin of error.
It is quite clever - but I don't see it replacing the password anytime soon. I'd forgotten one of my locations immediately after setting my passclick... and thereby failed the test.
My quick take: user retraining and the passclick reset process will be daunting issues that will hamper adoption...