Because SharePoint 2007 is built on ASP.NET 2.0 we get a new wonderful feature and that's forms authentication. Actually I think it might be more than just the idea that it's built on top of ASP.NET 2.0, it's probably because the team realized what a cool feature this would be to have for extranet and internet solutions. In my opinion this is going to help SharePoint become a development platform. Now if it just doesn't get priced at some astronomical figure I'll be really happy. There are some drawbacks though.
I think SSO breaks completely, but I haven't looked into any work arounds at all. Search technically breaks, but there is a work around for it. Basically you have to have two site that point to the same content. One site uses forms authentication while the index server uses the integrated secure URL. From what I was told search is ...