Stop Password Masking: http://www.useit.com/alertbox/passwords.html

Summary:
Usability suffers when users type in passwords and the only feedback they get is a row of bullets. Typically, masking passwords doesn't even increase security, but it does cost you business due to login failures.
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The Problem with Password Masking: http://www.schneier.com/blog/archives/2009/06/the_problem_wit_2.html

Shoulder surfing isn't very common, and cleartext passwords greatly reduces errors. It has long annoyed me when I can't see what I type: in Windows logins, in PGP, and so on.
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The Pros and Cons of Password Masking: http://www.schneier.com/blog/archives/2009/07/the_pros_and_co.html

So was I wrong? Maybe. Okay, probably. Password masking definitely improves security; many readers pointed out that they regularly use their computer in crowded environments, and rely on password masking to protect their passwords. On the other hand, password masking reduces accuracy and makes it less likely that users will choose secure and hard-to-remember passwords, I will concede that the password masking trade-off is more beneficial than I thought in my snap reaction, but also that the answer is not nearly as obvious as we have historically assumed.

I keep my passwords in another location on my computer and do a copy and paste each time I have to enter a password. That solves my poor typist problem for me while keeping the password from being seen by anyone else.

Many laptops now seem to have no indication of caps lock on and num lock on which makes entering passwords with upper case and/numbers somewhat difficult to enter if the result cannot be seen.

I like to be able to temporarily unmask my password in order to find out what it is, without going through the hassle of opening my password safe (which I might have forgotten to update). I think flexibility is a good thing - the arrogant folks who insist that there's only one way, and it has to be set up to protect idiots from themselves, just make life hard for everyone. So, have a checkbox to unmask, which is always unchecked by default, like WinZip.