Andrew Hull has improved on my captcha-code; he obfuscated the text even more than I have. He wrote:
Have a look through the code before you post it, I have made a few changes since yesterday, it can randomize the font and you might like to add random swirly function (pick one of sin x^2, 1/2sin(x) that sort of thing). You could also add a slope to the function (y=1/2x), or use a parabolic. Have a play with the variables, and you will see things become very wooly without being too unreadable.
Obviously you have to watch out for the text becoming completely unreadable. BTW wikipedea has a good section on captcha, detailing how bots try to get round it. I was looking to make PHPbbs more secure, and since it seems their inbuilt captcha can be fooled, I thought I'd look for a replacement, and that's how I stumbled on your code.
The idea of using noizified colours is really to fool the bots, since they generally look for a particular colour in the flattened image for their pattern recognition. Noizifying the font edges again is designed to break their OCR, and randomizing the font makes life even more complex for them.
The source of his variant is downloadable here.
An example of how it looks:
(This is the default setting; the captcha can be made more/less readable by adjusting parameters.)