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Geothermal systems are simply reversable air conditioners, but the heat sink/source is under ground which maintains a cool 54F year round. So you can pump heat from your house into the ground in the summer (cooling off the house) or you can pump heat from the ground into your home in the winter (warming the house). Practical systems haven't been around for long, so like any new technology (especially since it has moving parts) there are growing pains. It also depends on electricity, which may be more or less expensive than natural gas or other forms of heating. In theory it can be more efficient than most forms of heating and cooling.
Local (Michigan) article on Geothermal technology:
http://www.mlive.com/mbusinessreview/stories/index.ssf?/mbusinessreview/se/stories/20061013_green.html
Geothermal is a crapshoot due to the mechanicals, most folks who have these systems are lucky to get seven or so years out of them without an expensive repair (pump goes bad, loop springs a leak, etc.)
Bob