A lot of RC hobbyist have been talking about this article on Gigaom, which discusses class G airspace and what it means for non-commercial hobby use.

What’s interesting is that two aviation lawyers contacted by Gigaom state that the 400-foot AGL (above ground level) “rule” that most people quote is just an advisory suggested by the FAA in 1981, and that the FAA has no authority in airspace below 700 feet. The actual advisory states only that the FAA “encourages voluntary compliance” with regards to the content in the advisory.

So it looks like 700 feet AGL is the actual legal ceiling for unmanned hobby flights.