Well it turns out it's the suits.
I've only heard it mentioned once in the televised coverage so far, and that was brief. I looked up and they were saying something about how the suits they were wearing improved speeds by about.. 1 second per 100 meters!
Some other reports are also talking about the suits, but also the new pool designs and changes in the psychology of the sport and other factors, and how some people think the swimsuits are"technological doping."
I don't know what to think about it myself, it certainly makes the breaking of all the records less impressive unless one wants to view technological innovation as part of the competition, although it's not so much part of the competition since it seems that Speedo is happy to sell the suits to anyone who's willing to buy them. On the other hand at least that means that it's a benefit that's fairly available to anyone with deep enough pockets to afford it.
In other events, regular Volleyball seems... not quite boring. Old-fashioned? Watching the... six? seven? people on each team running around the indoor court with the yellow floor and the painted lines reminded me of the 80s. And gym class. It's certainly a better example of teamwork than Beach Volleyball since there are so many more people working together, but it makes it rather hard to follow. There's a writhing mass of people and then someone emerges to hit the ball (or not.)
Beach Volleyball seems more entertaining to me. The beach setting seems a lot friendlier, and although having just two people per team makes the results seem a little more random it also makes things a lot easier to follow, and it's easier to... focus(?) on the individual players. You get very little idea of who the people in the bigger teams are. Although it still took me awhile to figure out which of the US women's team is May and which is Walsh. (It didn't help that Misty May's picture in wikipedia has her with much blonder hair than she has at the Olympics =P)
Speaking of which, of course it doesn't hurt that half the teams in Beach Volleyball are half-naked girls :) Although as everyone who's expressed an opinion on the subject so far agrees, it seems unfair that the men aren't half-naked too. (At least they haven't been so far as i've seen.)
Also, why doesn't there ever seem to be a sponsor for the Olympics who isn't a "proud sponsor"? There are other ways of saying the same thing that get used, but the word "sponsor" seems invariably preceded by the word "proud" :)
Edit: Ooohh, some of the swimmers are really cute too :)