Namecoin difficulty varies using the same algorithm as bitcoin. I started the difficulty at 512 to account for GPU mining being available.
Just got this today:
./namecoind getinfo
{
"version" : 32100,
"balance" : 1000.05000000,
"blocks" : 2843,
"connections" : 3,
"proxy" : "",
"generate" : false,
"genproclimit" : -1,
"difficulty" : 290.98376578, <---- Has it gone down it is it my fault for using the old version?
"hashespersec" : 0,
"testnet" : false,
"keypoololdest" : 1304239257,
"paytxfee" : 0.00000000,
"errors" : ""
}