The Oyster Card is really good. I got mine over Christmas, and so have just been able to start using it. An incredibly convenient way to travel on the tube - No more standing in the queues fumbling for change or dealing with the grumpy bloke in the ticket office. There are downsides though...
First of all, the Oystercard is pre-pay (although marketed at "pay as you go"). They get your money, while you find time to spend it. TFL must make loads of money in the interest on that alone. At least you get to see your credit (unlike the Congestion Charge).
The other downside really affects the paranoid and the stupid. My friends will no doubt be chucking away that I'm even mentioning this, but the Oyster Card is of course and RFID tag   . With millions of Londoners carrying these around, and suitable technology, you could identify exactly where people had been, how long they'd been there, and even who they interacted with.
If you don't know, an RFID tag is a little electronic component. The yellow circles on tube ticket barriers sends out a signal, which makes the RFID tag start working and send a signal back. The yellow circle then reads this signal and knows the Oyster card number. It then looks that up on the computer to figure out how much money you have on your account and then opens the gates.
Right now, you have to put your Oyster card on the yellow circle to make it work. This is so that you've had to make a very positive act, which then authorises the deduction of money from your account. Conceivably, they could make a ticket barrier that was a bit more sensitive, so that you didn't need to even take the card out of your pocket - you just walk up to the barrier and it opens.
Go a few steps further, and stop thinking about opening barriers and deductng money. Now, imagine if they made a machine that was so sensitive it could detect you when you walked through the doorway of your place of work. Now, your boss could know when you got to work, when you went to lunch, when you got back, and when you went home. Take it a step further and put one of these "detectors" in every room, and your boss can tell how long you spent by the coffee machine, or in the toilet.
The cost of doing this sort of thing isn't going to be cheap. It'll come down in time, of course, but right now, it's either so incredibly expensive it seems "impossible". GIve it a few years and it'll be in the grasp of big organisations, perhaps governments and really big corporations. A few years later, and every man and his dog will have it.
That sort of world isn't necessarily all bad. I mean, what if your bank issued you with an RFID tag. Now, if you go into a cinema and sit down, they'll just deduct the ticket money from your account. If you leave the film early, they could even give you some money back. If you sit on a train to somewhere, you automatically get the fare deducted. If you do the return journey in the same day, then they deduct the 10p extra that would have been a cheap day return (or whatever). It could be incredibly good, and really convenient.
Of course, that scenario is kind of scary. If you were the government, you could be tracking exactly where someone went and what they did. In other words, if they decide they don't like you for some reason, then they will begin to know everything about you. It's hard to hide what you've been up to if they know exactly where you've been. It's probably even harder to explain you didn't do something if you've been to a certain place (let's say you're married, and you go to an old girlfriend's house for the night, it's going to be pretty hard to convince someone you're not having an affair!).
So, all in all, RFID is pretty scary. I suppose we should keep them in metal boxes or something, where they can't be detected. Possibly a bit paranoid, but if everyone did it, then RFID tracking technology wouldn't get developed (because there'd be no point).
I think I have a love-hate relationship with my RFID Oyster card ;-)
Update: There's some more information about Oyster on the OysterCard Wiki page!