Results presented The American Astronomical Society's Planetary Sciences meeting in Louisville earlier this month confirmed and strengthened the case for methane on Mars. Compounds like methane should be very unstable in the Martian atmosphere, indicating that something has been producing large amounts of methane up until the very recent past, or even continuing today. On earth, methane is chiefly produced by vulcanism and by the actions of so-called methanogenic Archea. At least one scientist involved in the recent work thinks that "oases" of living methanogen colonies could explain the observations on Mars. Methanogens "breathe" hydrogen gas and CO2 and "exhale" methane, all without oxygen.
With all of these ideas, of course, one must keep in mind that the whole planetary history of Mars is different from Earth, so all bets are still off! Still, the amounts of methane, and their apparently patchy distribution are going to be hard to explain. Moreover, the huge dust storms seen on Mars should be kicking up lots of surface soil. These soils contain oxides, which also can degrade methane, possibly "sweeping" parts of the atmosphere clean of methane on a much more rapid time scale-- months?-- even than currently discussed. In that case, something is really pumping the gas out!
An important second measurement which would strengthen the case for life on Mars would be the relative absence of ethane, which is released by geological processes which produce methane, but not by (terrestrial) methanogenic Archaea. Even an abiotic source of methane is likely to be a source of heat and therefore liquid water, so it will also be important to find out where the stuff is coming from!
UPDATES: I got the methanogenic metabolism wrong- it's 4H2 + CO2 making 2H20 plus CH4. I corrected this in the text above. This is a problem because free hydrogen should not be hanging around on Mars, and would have to be generated for these beasties to eat. On earth, many methanogens are hyperthermophiles; however, the "cow fart" variety lives at, well, cow temperature.
And the New York Times has a big and informative article.