I graduated from law school in 1999, and never heard about this "state secret privilege" that the Bush Administration is throwing at litigation they find embarassing. Apparently it's existed for decades as a legal concept, but was applied only rarely and mostly to exclude isolated pieces of evidence. Now the Bush administration had quadrupled its use and is asking judges to throw out entire cases, not just bits of evidence. The claim is not that the case is unjustified, but just that it's a potential secret.
Beyond the usual Bush Administration moral corruption, I have to wonder what's going on with the judges. It seems that sealing entire case from public access, maybe even the outcome of the case, is better than dismissing a valid claim. These judges aren't doing their jobs.