The front page of Digg have an article today about Using Sprites with CSS pointing to an article on Informit, What are CSS Sprites?
Have a look at the original article [by Dave Shea] published on A List Apart, CSS Sprites: Image Slicing’s Kiss of Death.
Well, the problem is that this technique suffer from the IE/Win Flicker which happens when background images are hovered. A better rollover technique is explained at SimpleBits – Flicker-Free PGA.com.