http://www.govexec.com/dailyfed/0705/072805b1.htm

Engineers have particular interest in two chipped heat-resisting tiles on the shuttle's underbelly and four divots in the insulating foam on the external fuel tank. At mid-day Thursday, mission managers still believed the tile damage was insignificant. They were more alarmed by four divots in the insulation on the fuel tank. The largest hole measures about a foot wide and two or three feet long, indicating the loss of an eight-inch-thick chunk of foam that weighed almost a pound.

NASA officials said they are reasonably sure from looking at video recordings that the largest chunk and two others did not strike the orbiter, but they lacked sufficient data Thursday to reach a conclusion about the fourth piece.

The biggest chunk came from alongside some pipes and a cable tray that run vertically up one side of the rust-colored fuel tank. When the tank was redesigned, NASA changed the way insulating foam is sprayed on this area, known as the PAL Ramp (Protuberance Air Load Ramp), in hopes of keeping the foam from coming loose. NASA considered removing the insulation altogether, but tests indicated that it provided some aerodynamic protection for the pipes and tray.

No debris shedding from that region of the fuel tank is acceptable, shuttle operations manager John Shannon told reporters Thursday. "It doesn't matter how close it came to Discovery," he said. "We're treating this extremely seriously. We're going to fix this before we go fly."

So what now, an EVA repair mission?

Again my bet is after this the Shuttle will never fly again. We've spent two years trying to fix this beast, let's spend the next five replacing it.