Well what I think he was talking about would be a little more specific then flesh- think of a bomb smart enough to seek out all muslims, or jews or anything that can be specifically defined by DNA or otherwise- thats what it will be able to do. Scarry ehh? Has anyone played Deus Ex? While I will say it might not come true there is a high probability, If the world keeps going the way it does (Patriot act- etc.: very good game and has a lot of insight).
Simply nanotech is even showing up today, aka. the pants. The dockers pants are coated with a nanoscale fibre that is small enough that water molecules (or whatever you are drinking) can't bond to the fabric- thus it slips off with gravity.
Think of curing aging and many other things, or maybe even enhancing jumping- over a large building. Sure not all will be firstly available- but look at computer tech to see how far it has advanced from the first microprocessor.
A good place for info on the latest happenings in the nanoworld is
www.nanodot.org , they have a lot of recent breakthroughs and recent debates about should nanotech advance this way?, etc. Did any of you know that the chief scientist of Sun Microsystems doesn't want nanites or basically nanotech to advance?
http://www.wired.com/wired/archive/8.04/joy.html
I don't agree with him- simply put in short way I agree with most comments from-
http://www.kurzweilai.net/articles/art0106.html?printable=1
Most people who are in the feild think Bill Joy is an alarmist about nanotech- but considering what happened with nuclear, biological, etc. this will probably be banned from smart weapons research- just hopefully the U.S. goes with that too.