With the scientific successes of the soft X-ray FLASH facility in Germany and the recent spectacular commissioning of the Linac Coherent Light Source at SLAC, free electron lasers are poised to take center stage as the premier source of tunable, intense, coherent photons of either ultra-short time resolution or ultra-fine spectral resolution, from the far infrared to the hard X-ray regime. This paper examines the state of the art in FEL performance and the underlying enabling technologies. It evaluates the state of readiness of the three basic machine architectures—SASE FELs, seeded FELs, and FEL oscillators—for the major X-ray science user facilities on the 5–10 years time scale and examines the challenges that lie ahead for FELs to achieve their full potential throughout the entire spectral range. In soft and hard X-rays, high longitudinal coherence, in addition to full transverse coherence, will be the key performance upgrade; ideas using laser-based or self-seeding or oscillators can be expected to be qualitatively superior to today's SASE sources. Short pulses, from femtoseconds to attoseconds, can be realistically envisioned. With high repetition rate electron sources coupled to superconducting radiofrequency linear accelerators, unprecedented average beam brightness will be possible and many users would be served simultaneously by a single accelerator complex.