First off I should explain what a Captcha is. Captcha is a method of fooling the spam bots so they won't fill out forms, gain access to sensitive locations of a site, etc. by using a visual image instead of a password or readable text access point. For a time, this worked wonderfully...
But just as technologies evolve, the Captcha's inevitable demise was immanent. Spam bots are getting smarter and smarter every day and now even the most sophisticated Captchas are being cracked (Window Live Hotmail, GMail and even Yahoo). The only real defense against the spambots now is to make the Captchas even harder to read and eventually they'll be impossible to read... even for the people who are supposed to read them.
This has already been the case in many instances. I've seen some Captchas that even I couldn't decipher and the only reason I was finally granted access or was able to submit a form was the life saving "refresh Captchas" button. Ridiculous.
Captchas also pose a significant hindrance to special needs users like the blind who's screen-readers are unable to decipher the Captcha code.
So what's the answer? I don't see much of an easy answer. One answer I do have though is that the Captcha is or will be officially dead very soon. There are alternative methods of detouring the spambots from accessing various aspects of the stie such as logic questions like "how many sides a triangle have...". Spambots still can't "think" or answer questions requiring common knowledge.
In the end though with every advance in technology, the bad guys are right behind us with a solution, pushing us further and further along.