The regulations as drafted say that passports are required in 2006.
However, there is a chance it could change. Right now most travel agencies and cruise lines are recommending that people get passports. They are not yet saying required because they realize it could change. They don't want to have upset customers who spent money on passports and then it turns out they are not needed.
I would say at this point passports will definately be required at some point in the future. The implementation of the requirement could be delayed. So they may not be required in 2006.
Pay close attention to how this unfolds. I would allow three months to get passports. That is also around the time you could cancel your cruise without penalty. So I'd wait until 3 months out and make a decision based on how the regulations stand at that time.