When an airplane has a crash one of the biggest considerations is finding the "black box". The black boxes (on airplanes there are two of them) record data about events just before the crash, and are able to help crash investigators figure out what the heck happened. For example was there an airplane failure, bad weather, or poor piloting, etc? They sound great when put into an airplane, right?
Event data recorders (EDR), also known as crash data recorders, are being installed in many new cars. Generally we the people do not know about them, but they are installed in our cars, and they record a short period just before airbags deploy. The purpose is similar, to record some data about an accident, hopefully to make better airbags, and hopefully to help a traffic crash reconstructionist do a better job of reconstructionisting.
According to a CNN report I just watched, the EDR's are sometimes inaccurate and as a result people have gone to jail over the inaccuracies. See, what happens is if the EDR shows the person was driving recklessly, e.g. at 114 miles/hr in a neighborhood, then the driver can be placed at fault in the crash, and could go to jail on manslaughter charges.
Harris Technical: Crash Data Recorders: gives a good explanation as well as pointers to lists of cars containing these devices, case law, etc.
The NHTSA Event Data Recorder Research Web site is the official, National Highway Transportation Safety Agency, web site concerning EDR's. This includes research articles, media articles, history, and more.
The Canada Safety Council calls them reliable and points out that while these have been used at times to help establish guilt, they have also been used to establish innocence. The CNN report I saw above portrayed two people who were convicted and felt they were innocent.
Big Brother: Should it be in your car? is an article from the Detroit News, with an overly sensational headline, discussing these things. The article describes that 20 U.S. states have laws about the use of the data, and in most cases the law says the owner of the car is in control of when or if the data is to be disclosed to law enforcement or insurance companies. There are also requirements to inform car owners, to have a section in their owners manual, etc.
Privacilla.org has an information page and suggested lobbying material.
2006 Privacy Legislation Related to Event Data Recorders ("Black Boxes") in Vehicles by the National Council of State Legislatures lists the 2006 legislation in the U.S. states regarding these devices. Their 2005 list.
Black Boxes: Event Data Recorder Rulemaking for Automobiles is a book about these devices. The author is widely recognized as a leading researcher on vehicle black box technologies. The book provides useful information for motorists, attorneys, public safety advocates, public policy administrators, engineers, automotive professionals, journalists, and insurance executives.
The Insurance Institute for Highway Safety has a Q&A page.
Do-it-yourself car-monitoring devices is a Consumer Reports article describing and testing aftermarket event data recorders you can add to your car. One use case they discuss is if you have a teenager driver, are they driving safely?