If you look at the actual WP create account page here: http://en.wordpress.com/signup/
You'll see that there is a box for your password and a confirmation of the password, so that leads me to believe that they are actually sending the user the password they created the account with, rather than a randomly generated one. Otherwise, why have the input fields there at all?
Therefore, they must be storing either plain text or two-way encryption.
Re:How Not to Do Web Site User Registration
by TallGuyShort on Wednesday May 27, 2009 @02:04PM
(#628854)
Which also suggests that these are passwords that most users use for other online accounts...
Yes it should be https at the least, but aren't you going to go in and change the password immediately anyways?