Check out the new issue of Tropical Fish Hobbyist for some very good info on glofish. It's not cruel, there are no needles involved to make them glow. Their genetic makeup has been altered to make them be able to have the "glow" and this trait is passed on to the next generation, so on, just like regular fish. They can and will interbreed with regular zebra danios, just as the leopard danios and long fin danios can and will (actually, they're all the same fish).
What people seem to be having problems with is whether these fish should even have been created at all. Folks, it's too late for this debate. The fish are already here. They are probably at your LFS. If you disagree with their being there, don't buy them. If there is no demand for the fish, the people who have invested their money into the breeding of this fish will get no return on their investment. The old law of supply and demand. They will eventually take their money elsewhere.
What I find to be more of a problem is that they have "patented" a life form. You can buy as many of these fish as you want, and when you get them home, if conditions are suitable, they will breed. You, however, are prohibited from selling these fish, because they have a patent on them. Just like copying a music CD or a DVD, if you copy it (or breed the fish) for your own personal enjoyment, that's legal. You can have as many baby glowfish, or copies of "Scary Movie" as you want. Try to sell that copy, though, and you're breaking copyright law.