Awarding Krugman the prize at a time like this sends a strong signal to the market fundamentalists who presently run the US economy -- the kinds of people who have tended to win this award over the years. . . . By having lionized so many free market zealots over the years, the Stockholm-based committee deserves some share of the blame for the present economic meltdown. The Nobel Prize Committee appears to have seized an opportunity to salvage its reputation.
UPDATE: Wikipedia's page on the economics Nobel Prize mentions criticism of the prize by philosopher and financier Nassim Taleb:
Nassim Taleb criticises the Prize for promoting economic theories based on a misunderstanding of risk. He points to the 1990 Prize in Economics, awarded to William Sharpe and Harry Markowitz for theories that, Taleb says, had already been undermined by the stock market crash of 1987; the 1997 Prize, awarded to Robert C. Merton and Myron Scholes for their option pricing formula; and the 2003 Prize, awarded to Robert F. Engle for his "ARCH" method of prediction of volatility, which Taleb says underperforms relative to volatility forecasts made by ordinary tradersTaleb, along with Soros and Krugman, saw the financial crisis coming a long time ago. (See "blogging the Black Swan)."
UPDATE II: Excellent examination of Krugman's contributions to economics at Marginal Revolution.