I’ve been trolling yahoo answers quite a bit recently and this question comes up so much it is very sad.
There was a time a couple years ago when RealID was a hot issue where this was rumored to be true. States were voting to not enact RealID due to the cost of implementation and not enough federal funding. DHS/TSA struck back by saying people from states not RealID compliant (which was pretty much every state except NC) would not allow those licenses/IDs for travel. All states were quickly issued a waiver to prevent mass chaos. RealID still rears its ugly head, but there is no requirement from TSA or otherwise for US domestic travelers to need a passport. Presenting a photo ID as listed on the TSA website does help one get through the checkpoint without getting their stuff searched automatically, but photo ID is not *required*. This means if you are traveling and your wallet gets stolen your main concern should be getting your credit cards canceled and such NOT how you will get on your flight home.
So in summary: No passport needed for domestic US travel. Valid photo ID with name, gender, date of birth, expiration date is good, but with a search it is possible to go through without it.