I've been to Canada about 15 times, once by plane to/from Vancouver and the rest by car; all but one crossings were done at or near Vancouver, the other at Maine/NB border.
By car...drivers license has been sufficient every time, although I did have a voter ID and or passport just in case. Never been searched or questioned other than the 2 or 3 basic questions. When my Belgian girlfriend was with me last month, they did require her to get a stamp in her passport, but they didn't question me. The only difficulty was when I was leaving from the Vancouver airport. At the Vancouver airport, the U.S. INS, which allows someone to clear customs before departure, gave me a hard time because I couldn't find my passport before I left home and only had a drivers license and voter registration. The INS agent said that my voter registration was not sufficient proof of U.S. citizenship, although I have read that they are supposed to accept it as proof.
My personal feelings on customs/immigration is rather Libertarian...there shouldn't be any! Anyone should be allowed to travel anywhere for whatever reason they want without search, taxes, questioning, or documents. Maybe someday?
One for comment...I thought that NAFFA was supposed to lessen the hassle at the Canadian and Mexican borders? Isn't NAFFA supposed to remove at taxes from goods brought across the N. American borders?