Apple details Fingerprint Sensor/Touch ID security as well as a bunch of other questions answered.
Via the Wall Street Journal, an Apple spokesperson fleshes out some of the finer details surrounding the fingerprint sensor and Touch ID. To use Touch ID, it is mandatory to also set up a passcode. This acts as a fallback in case the fingerprint sensor fails temporarily or experiences a permanent hardware fault. iOS may necessitate a passcode under some other conditions, as well.
Assuming that you believe them, and don’t think they’re a front for the NSA to get everyone’s fingerprints as well as location, contacts, etc (the iPhone does seem to be the phone of choice for terrorists), this is good news.