Obama had to make sure today that everyone knew he has never said a word about negotiating with terrorists (other than to say he wouldn't do it), because over the past couple days, a lot of right-wing hacks seem to have gone around saying that Obama wanted to sit down with Hamas and Hezbollah and whoever else, as part of the whole "appeasement" thing. Leaving aside the fact that none of this is true, it's really up to the Israelis to deal with Hamas and Hezbollah, and the US can be nothing more than a facilitator of talks between them.
So the question remains, what about Iran? It is true that Iran's President, Mahmoud Ahmadinejad, is a bit of a nut. He's mused about a world without Israel (or wiping Israel off the map, depending on how you translate it), he's voiced doubts about the holocaust, and his religious views are, by all accounts, quite radical. But he is a president of a sovereign nation. He isn't a terrorist.
Looking back over the past 7 and a half years, has Bush's policy vis a vis Iran (ie. not talking to them, calling them part of an "Axis of Evil", and threatening them with attack every now and then) been a success? Obviously not. If anything Iran has become much more powerful in the Middle East since Bush took office. The war in Iraq removed one of their oldest and most inplacable enemies, Saddam Hussein, and gave political power in that country to the majority Shiites, who Iran holds a great deal of influence over. Aside from the US, the Iraqi government's most important ally is, ironically, Iran. And they've been bold enough to let their proxies in Hezbollah start a war with Israel and fight to a symbolic victory. And with the price of oil higher than ever, Iran has more resources with which to pursue its ambitions.
Can talking to them really be any worse? According to the Bush administration's own intelligence, there is no Iranian nuclear weapons program. Bush was embarrassed by that admission, of course, and he prefers not to dwell on that issue when he compares Ahmadinejad to Hitler in front of foreign parliaments. So that's one issue off the table. Since the US and Iran have not maintained diplomatic relations for some 30 years, no one should expect immediate progress on any of the outstanding issues. Iran will continue supporting Hezbollah for the forseeable future. They will continue meddling in Iraq. And Ahmadinejad is not going to change his entire political/religious philosophy. But the simple act of talking, country to country, equal to equal, is an important and necessary precursor to working this stuff out.