It seems like a very cool way to decentralize a DNS table (name -> IP address, right?) But I don't get why it has an exchange value to BTC or USD... Is there a fixed NMC price to register a domain name? Is Casascius going to stamp NMC keys onto brass coins too?
Not really. According to the Bitcoin Wiki:
Namecoin is an alternative distributed Domain Name System (DNS) on the basis of Bitcoin software.
In contrast to a currency, according to Wikipedia
A much more general use of the word currency is anything that is used in any circumstances, as a medium of exchange. In this use, "currency" is a synonym for the concept of money.
It is clear that Namecoin is not primarily intended as a medium of exchange, but with a more specific design in mind. The fact that it can be exchanged does not mean that it is used as a medium to exchange value.
For a more detailed explanation about what Namecoin really is, check out the Bitcoin wiki.
As the Namecoin.info website states, "It allows you to . . . trade and transact namecoins, the digital currency NMC." So the simple answer is that yes, Namecoin is considered a currency, among other things.
The current domain name situation is a top-down hierarchy of trust where the top folks accredit those below until you get the registrar that you pay to register your domain name. The distributed Namecoin aims to democratize that. If you mine Namecoins, then you have the authority to register a domain name.
The reason you have an exchange rate is because non-miners want to register names too. A non-miner needs to give a miner something of value to get the Namecoin.
Namecoin includes all of the functionality that Bitcoin has, so the technology itself can be used as a currency to the same degree that Bitcoin can. That said, the intention of Namecoin is not that it primarily act as a currency, but rather as a decentralized naming system where you can register and transfer names and attach data to those names.
NameCoin was designed for more than just cryptocurrency aka money, currency, trading for cash - whatever it is you want to call it.
It is much like BitCoin because it's built on the original BitCoin source - BUT - it has quite a bit of additional things added to it for DNS functions.
check http://namecoin.info for more
However - All of you that say it's NOT "money" - I'm confused at your reasoning. I can go to an exchange right now and trade Namecoins for USD ($$) just like BitCoins. I can also trade NameCoins for BitCoins and vice versa.
https://vircurex.com/ -> Going rate per NameCoin today is 0.30001009 USD
Might not be much - and it might never get as high as BitCoin one may argue (as it's main purpose is NOT to be "Another BitCoin")...but the fact that it's built on BitCoin and you can merge mine both via pools, and exchange it for Cash money - I don't see how you can argue that it's NOT the same as BitCoin with more features/functions.