Sometimes you feel like hacking, but there is that legal issue that stops you from playing around, so here are a couple of sites to help out. For newbies try www.try2hack.nl, its a lot of web based hacking, fairly simple challenges. If your more experienced check out www.hackerslab.org, at this site you get to spend most of your time in a unix shell playing around and learning some good techniques. Hackerslab offers the website in many languages. Click on the Hack Free Zone button to register, and read the FAQ.
I'm currently on level 1 (made it through level 0 fairly quickly) On Hackerslab, I'll keep working on it later, gotta get back to work. Tell me if you join, or have joined, what level you are and if you know of any other sites like this one. Have fun!
Update: Now on level 7, for some reason I got stuck on level 2 for a few days. I must have been sleeping or something (man more)