The story of how @N recently lost his Twitter handle is typical of increasing evidence that passwords alone are becoming ineffective as a means of protecting our data and identities online.
Two Factor Auth (2FA) seems annoyingly inconvenient at first, but in my experience (with Google, App.net and Twitter) using it soon becomes second nature.
This list of services providing 2FA is a great resource that seems to be growing by the day. In the absence of any radically new and substantially more secure method of authentication, 2FA should rapidly become the norm.
Might as well get on board sooner than later.