Here's an interesting article about password security: http://www.codinghorror.com/blog/2007/09/youre-probably-stor...
Even better is the linked article from matasano.com, but the link at codinghorror.com is broken. This should work: http://chargen.matasano.com/chargen/2007/9/7/enough-with-the...
To quote from that article: "We learned that the correct choice [to store passwords] is Bcrypt." (which is definitely one way)