As of June 1, 2009, all U.S. Citizens will be required to present a valid form of identification to re-enter the country from Canada, Mexico and the Caribbean.  This is both on land and by sea.  The four acceptable forms of identification are:

1. U.S. Passport
2. U.S. Travel Card
3. Enhanced Driver's License
4. Trusted Traveler Program Card 

There are some advantages to choosing the travel card over a passport.  If you are doing only land or sea travel, the cost of the card is about half that of a passport.  The card is the size of a driver's license and is valid for 10 years for adults and 5 years for children under the age of 16.  It is not valid for international air travel.  So if your travel is primarily international land or sea travel, the travel card is a good, less bulky option.  If you will be doing any international air travel in addition to land travel, the passport is still your best financial bet.