The Freakonomics blog notes "Producing a penny costs about 1.7 cents, and the Treasury’s annual penny deficit is about $50 million, according to a New Yorker article by David Owen."
Heck, let's get radical here:
Get rid of the penny.
Get rid of the nickel.
Put Reagan on the dime -- on the back, so Roosevelt looks to the left on the front, and Reagan looks to the right on the back.
Get rid of $1 bills. $1 coins will work if we get rid of pennies so there's an open slot in the cash register.
Introduce a $3 bill, with Bill Clinton on it. ;)
Introduce a 50 cent piece with the back sold to the highest bidder. So, for 2009 we might have "Pepsi" on the back, followed by "Chevrolet" in 2010. Open question: do they have to be US companies?