As of Mac OS X Lion 10.7, Terminal includes exactly this functionality as a Service. As with most Services, these are disabled by default, so you'll need to enable this to make it appear in the Services menu.
System Preferences > Keyboard > Shortcuts > Services
Enable New Terminal at Folder. There's also New Terminal Tab at Folder. which will create a tab in the frontmost Terminal window (if any, else it will create a new window). These Services work in all applications, not just Finder, and they operate on folders as well as absolute pathnames selected in text.
You can even assign command keys to them.
Services appear in the Services submenu of each application menu, and within the contextual menu (Control-Click or Right-Click on a folder or pathname).
The New Terminal at Folder service will become active when you select a folder in Finder. You cannot simply have the folder open and run the service "in place". Go back to the parent folder, select the relevant folder, then activate the service via the Services menu or context menu.
In addition, Lion Terminal will open a new terminal window if you drag a folder (or pathname) onto the Terminal application icon, and you can also drag to the tab bar of an existing window to create a new tab.
Finally, if you drag a folder or pathname onto a tab (in the tab bar) and the foreground process is the shell, it will automatically execute a "cd" command. (Dragging into the terminal view within the tab merely inserts the pathname on its own, as in older versions of Terminal.)
You can also do this from the command line or a shell script:
This is the command-line equivalent of dragging a folder/pathname onto the Terminal application icon.
On a related note, Lion Terminal also has new Services for looking up man pages: Open man page in Terminal displays the selected man page topic in a new terminal window, and Search man Pages in Terminal performs "apropos" on the selected text. The former also understands man page references ("open(2)"), man page command line arguments ("2 open") and man page URLs ("x-man-page://2/open").