If you've read Neal Stephenson's brilliant novel The Diamond Age, you will certainly remember his description of "toner wars" -- clouds of carbon-based nanoparticles fighting it out as tools of economic or political dominance. Breathing in the microscopic machines wasn't good for you, but that was related to the various nasty things that the overly-aggressive nanoassemblers might do once in your system. In reality, the danger from such a threat would may have more to do simply with how small they are.
According to Technology Review, a variety of researchers around the world are starting to take a look at the biological effects of nanoscale materials. As buckyballs and carbon nanotubes hold the potential to do so much good, it's imperative to understand the potential downsides of the technologies so as to make reasonable choices and to develop countermeasures. The first bit of research suggests that carbon nanotubes (which we've talked about here a few times) can embed themselves into air sacs in the lungs, leading to toxic effects.
A variety of groups are looking into nanoparticle safety concerns, including the American Food and Drug Administration and Environmental Protection Agency, the Royal Society in the UK, and the Center for Biological and Environmental Nanotechnology at Rice University.
Developing a realistic sense of the environmental dangers of nanoparticles is crucial both for protecting our health and for encouraging the development of world-changing (in the positive sense) technologies. It's far better to learn early what the problems may be -- and have the pace of technology innovation slow in order to allow for corrective measures to be developed -- than to plow ahead at full steam and run into public fear, lawsuits, and over-reaching legislation down the road.