It's pretty cool if you look at how they do it. They basically put a lens array in front of a normal sensor, and it breaks the image up into lots of little circles of light that are at different focal points. It kinda looks like what you'd see through one of those bug eye lens things that they sell as kids toys in museum shops. I think they call it a fresnel plenoptic lens array or something. Anyway, the image that comes out of the camera looks weird, and those circles contain a lot of overlapping data. You've got to process it with special software that does some sort of Fourier transform on the data to make it into an image. The downside is that because many of the pixels contain duplicate information at varying focal distances, it lowers the effective megapixel rating of the sensor. The other downside (depending on how you look at it) is you've got to pull the image into their software for processing.
I could see the hardcore sports photographers digging it if they can get the image processing in the camera to keep up with a sensor of sufficient megapixels to end up with a final image large enough for commercial purposes. Having a great shot of the game winning TD that's slightly out of focus doesn't make the big bucks. I'm sure they'd pay for that 100% certainty.
Also worth mentioning, Lytro used to go by the name Refocus Imaging, and had some press releases a while back. I think they're doing a better job at the PR game this go round, and make little mention of the reduced effective megapixel, etc., etc. They're definitely focusing more on the marketing and user experience over the technology. They've also gotten a ton of venture capital recently. It will be really interesting to see what all becomes of them.
Edit: Found the article from Feb. '08 - CNET - Refocus Imaging
"A lot more image processing is required, for one thing, though Ng legitimately points out that camera processors are steadily improving. Another big drawback is that the full resolution of the image sensor isn't available in the ultimate image the camera produces.
Ng isn't willing to discuss exactly how much resolution is lost in the process at this stage in the company's research. 'You can get gorgeous 4x6 prints or (larger), and take those much more dependably,' he said."