As I understand it, this deal undermines serious nuclear nonproliferation strategy by letting India off the hook for its refusal to sign the nuclear Non-Proliferation Treaty (NPT). All the best nuclear watchdogs--including er, Sam Nunn--think this is a bad idea. But the Bush administration apparently cares more about building a strategic alliance with India than the risk of loose nukes.
And in this case it appears Obama, for all his good talk about nonproliferation, is on the side of realpolitik. It'd like to hear more from him on this.
Update: See comments for some smart perspective on this, and also more detail on Obama's position.