I just read a
fantastic editorial published in 2008 for the journal
Psychological Science in the Public Interest (Vol. 8, issue 2, the link is a pdf of the article) that succinctly articulates the the consequences of the public's statistical illiteracy. I'm in the middle of studying for midterms right now and don't have time to write a longer response, but I highly recommend it (since my observation of this exact problem is one of the reasons why I started FogMag!).
Published on April 10, 2010 in Medicine