Notice WIRED has coverage of a legal challenge to various websites which use Local Shared Objects in Adobe Flash Player to complement browser cookies in identifying return visitors… got picked up by Slashdot and Techmeme.
I don’t know details of the individual websites or the particular concern, but I do know that Adobe has expressed its position on this… see the February “Adobe condemns cookie respawning in comments to FTC” and “My Interview with Adobe Chief Privacy Officer”. Adobe is also working with the major browser vendors to integrate with their recent “private browsing” modes.
(For me personally, the bigger issue is any such storage and identification done by third-parties across websites… the WIRED article’s webpage itself requests assets from nearly a dozen third-party domains: “web beacons” which notify a service when you visit a page. Details of local storage or IP tracking only seem to matter once such third-party notification systems are in place.)