Over at Degree.net, another great source for finding information on distance education and online universities, Rich Douglas talks about accreditation and transfering credits to from or to other schools.

"Is it accredited?" This is likely the most asked -- and most misunderstood -- question regarding distance education. Even if the asker can't define accreditation, he knows, in some vague sense, that it relates to the usefulness of a degree. Education is an investment; if someone puts time and money into earning a degree, he wants it to be recognized, to help him reach his goals: in a word, to be useful. Unfortunately, because of the way the system works in the U.S., "accredited" and "useful" do not mean the same thing.

Part of what is misleading about accreditation is the word itself. It sounds so formal, official, definite. It's not. Unlike almost every other country in the world, where it is the government that decides what is and isn't a legitimate institution of higher education, the U.S. does not govern who is and isn't accredited, nor prescribe what degrees are or are not legitimate.