IMHO, ARMs are a major reason of why we're in this mess. If it were up to me, they'd be banned outright. If someone can't pay the freight on a 30yr fixed then they don't deserve it in the first place.
I was in mortgage biz a few years back. The ARM's aren't great, but the really horrible loans were the interest only's and neg-am's. Those borrowers never stood a chance.
Being highly leveraged is like working with explosives. It can be very well paying but it takes only one mishap to lose everything.