Steganography, chances are you've done it when you were a child. Ever capitalised letters in sentences so that they form a word when "decoded" by the recipient? That's a form of steganography! A very simple form none the less!
The images below look identical, and without the reference base image you wouldn't know it had anything hidden in it.

The koala on the left actually contains the entire first chapter of the bible encoded in it's data. (Not the image above as this is a highly compressed version of the original sources)
The source code linked simply shows how quickly bits of information can be encoded. It's not the best or cleanest code, but it was a for fun and only took a couple of hours to get working correctly. Obviously many levels of extra encryption can be added on. I'll probably update this at a later time to have more encryption (although showing everyone the encryption process kind of negates it!)
Cant be bothered to read the code? Here's how it works in a nutshell.
Encoding
Decoding
Pretty Simple!
Updates:
03-01-11 : Added First Pass source code