Mozilla has let it out on their Wiki that the next version of Firefox will offer a Private Mode, in which writes to cache, history, and other traces of a user's browsing activity are blocked. This has been considered before but was sidelined indefinitely in the run-up to the release of Firefox 3.0.
Why the sudden change? Well, certainly the recent buzz around Google Chrome and Internet Explorer 8 shipping with privacy-mode features had a lot to do with it - not to mention Apple has been offering "private browsing" features in its Safari browser for some time now.
As you can imagine, the battle of the browser is heating up and Mozilla needs to keep pace with competitors. But aren't all these "private browsing" features just giving users a false sense of privacy? After all, they are in general are a client-side feature, and irrelevant when considering they can't actually stop a network admin from tracking visited URLs or websites from logging a user's IP. Then again, they could make it safer to browse in shared computer environments.