The US Government Passport rules have become much more restrictive over the last few years, so if you have not travelled recently be sure your documents are in order.
Generally American citizens now need a passport or special travel document for travel from the USA to Mexico and Canada.
Here is the website with official information: travel.state.gov/passport/passport_1738.html
From US Government:
The U.S. Electronic Passport
The U.S. Electronic Passport (e-passport) is the same as a regular passport with the addition of a small contactless integrated circuit(computer chip) embedded in the back cover. The chip securely stores the same data visually displayed on the photo page of the passport, and additionally includes a digital photograph. The inclusion of the digital photograph enables biometric comparison, through the use of facial recognition technology, at international borders. The U.S. e-passport also has a new look, incorporating additional anti-fraud and security features.
Since August 2007, the U.S. has been issuing only e-passports. However passports without chips will still be valid for the full extent of their validity period.
ICAO Request for Information – 8/2007