The new passport laws state that:
"Beginning January 23, 2007, ALL persons, including U.S. citizens, traveling by air between the United States and Canada, Mexico, Central and South America, the Caribbean, and Bermuda will be required to present a valid passport, Air NEXUS card, or U.S. Coast Guard Merchant Mariner Document, or an Alien Registration Card, Form I-551, if applicable."
But there are some very important exceptions for US Citizens wanting to enjoy a tropical vacation:
"The passport requirement does NOT apply to U.S. citizens traveling to or returning directly from a U.S. territory. U.S. citizens returning directly from a U.S. territory are not considered to have left the United States and do not need to present a passport. U.S. territories include the following: Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa, Swains Island, and the Commonwealth of the Northern Mariana Islands."
It is important to remember that the US Virgin Islands is a port of entry, so you still have to go through customs when you fly back to the mainland. You will be asked your citizenship in customs and on many occasions the author has been asked for proof of his, this seems to be at the discretion on the agent in customs. In one case, when presenting a state issued drivers license, the response from the agent was that this only proves ones right to drive in the states, not citizenship, thus, a second piece of ID like a birth certificate or voters registration card in one's wallet is not a bad idea.
It is also worth noting that if you plan a side trip to the British Virgin Islands or another Caribbean Island, a passport is a must. In the past, a birth certificate would do but this is no longer true.
Information on new passport laws from the US State Department.