I've been experimenting with Cycles I had a bit of playtime with some materials and image textures. One thing though I noticed that Cycles doesn't seem to work with pngs with alpha at least not yet. There is a workaround though on BlenderNerd to apply alpha transparency to an object using the nodes. So far though I haven't found a way to render a transparent back ground, the RGBA setting is there but it doesn't work yet. Maybe in 2.62 ?
Here's my first test render with Cycles
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