Ethanol has the potential to be a renewable resource (if it can be derived en masse from cellulose, rather than from petrochemicals). Even derived from sugar as it can be atm, like kini said, 85% of the energy produced from combustion of ethanol was required as an input in distillation, fertilisation etc. This means that although hypothetically the use of ethanol has a zero impact on the greenhouse effect (i.e the co2 produced in combustion was the same co2 obtained during photosynthesis), the additional energy inputs makes it only slightly better than petrol (though it lacks the lead, particulates, C, CO that is also released in petrol combustion). Nascent use of solar energy to distil may however improve the energy efficiency of ethanol, and its impact on the carbon cycle/greenhouse effect.
Although on a per gram basis ethanol yields less energy (I think it was 30kj as opposed to 48kj), the incomplete combusion of petrol diminished the energy yield from petrol, so as to make the differentiation less so.
Ethanol is also useful atm for regional/inaccessible areas that cannot be easily supplied with petrol - particularly for those areas that can grow/distil their own petrol. Ethanol for most others, is still more expensive than petrol, particularly the change in infrastructure/engines etc that it would require. And in this mercenary world - thats really what has halted the adoption of ethanol.
Oh - and don't forget the nice little earner ethanol is for manildra/fed govt
be careful singing the praises of ethanol to highly - most markers would appreciate the inclusion of the many caveats that exist, and an assessment of what still needs to be developed/improved to make the implementation of ethanol as a supplement/replacement for petrol more feasible.