Vinod Khosla presents the argument for replacing gasoline with ethanol. (Google Video link.)
Robert Rapier with the argument against.
I don't really have time at the moment to go in to each, but I generally side with Robert, who elsewhere on his blog has pointed out that the single most important factor in Brazil's "ethanol miracle" has been that the Brazilians use far, far less oil per person than the US does. If the US were as oil-efficient as the Brazilians, ethanol would be unnecessary: America could produce enough crude to run it's own industries - for a while. (Last year the US produced less oil than anytime since the 1940s.)