Disposing of large amounts of styrofoam is a real pain. While there's some packaging stores that will take clean styrofoam peanuts, it's a challenge to dispose of large styrofoam blocks.
Most attempts to recycle styrofoam don't work very well. Styrofoam is cheap to produce. The standard method of recycling -- grinding up the styrofoam, heating it, and reforming it into blocks -- makes low quality styrofoam. But I was impressed when I came across this paper (pdf) from Sony. It's a clever method of melting the styrofoam, storing it efficiently, then extracting the raw material. All with non-toxic solvents. Sounds like a great solution.
Update: Seven years later, a styrofoam recycling facility has opened near Seattle.