I've said it before, and I'll say it again - the problem isn't the kind of fuel we use in our automobiles, the problem is our automobiles.
Some new studies published in the scientific literature conclude that "almost all biofuels used today cause more greenhouse gas emissions than conventional fuels if the full emissions costs of producing these “green” fuels are taken into account" (see NY Times article). At issue here is the amount of land being converted to agricultural uses to grow biofuel crops, and the greenhouse gas emissions created when forest, shrub or grasslands are cleared, burned and plowed to plant fuel crops.
We already know that there are many implications of biofuel production beyond the "green" aspects of cleaner burning fuels. Production of government-mandated ethanol in the USA from corn and soybeans has driven up the price of these crops, and therefore the price of food. There are even some shortages of these crops because of the demand for them by the biofuel industry. Ethanol production from corn and soy is more profitable than using these crops for food. This has far-reaching global implications in economic and social terms.
The problem, and solution, isn't the fuel we burn, it's burning the fuel in the first place. The number of automobiles in the world is increasing rapidly, with a related demand for fuel. We need to develop different concepts and methods of transportation, and we need to plan our communities around principles of sustainability instead of around the automobile.
There is no such thing as a free lunch; biofuels aren't the magic bullet. Let's get smart.