Microsoft Research has just launched a new Web site InkBlot, which shows, a series of Rorschach Inkblots and helps users create a secure, personal password that is easy to remember. The user is presented with a sequence of random inkblots. Each should remind the user of a word, a butterfly or a pumpkin, for example. For each image, the user then types the first and last letters of the word that come to mind, such as 'by' for butterfly or 'pn' for pumpkin. InkblotPassword.com currently has 1,000 inkblots in its database.
Passwords almost always suffer from one or more serious problems. Users have a difficult time remembering strong (high-entropy, hard to guess) passwords. Users handle this difficulty by recording their password somewhere insecure, by selecting a weak but memorable password, or by using the same password at multiple sites. You can also learn more about the principles behind inkblot passwords in this Microsoft Research technical Report MSR-TR-2004-85.
One question which comes to mind, is that if the site is saving the word associations, does it mean that it is saving your password too ?