Most of the law has been put on hold - this is not a final ruling, but definately a legal set-back for those in favor of the Arizona law. One of the biggest problems the judge had with the law was based on the Constitution's Supremacy Clause (Article VI) saying that the law would interfere with federal immigration enforcement.
Rights of individuals stopped under this law were also a concern. This article has a summary of major points in the ruling.
Nation & World | Judge blocks key parts of Arizona immigration law | Seattle Times Newspaper
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