Here's a good article from Technology Review on some of the new processes that could make biofuels much more economically and environmentally attractive than today's crop ethanol and biodiesel. The new techniques have a lot more in common with petrochemical plants than with the sort of "twee" whisky distillery-style operations that have characterized biofuels thus far. In order to contribute on a scale big enough to matter from a global energy perspective, bio starts to look pretty industrial.
Even so, industrial-scale biofuels should still offer beneficial geographic diversity of supply, compared to the petroleum products manufacturing and distribution system. After all, the relatively large bulk and low energy density of biomass, consisting of crop waste and energy crops, dictate a shorter supply chain than for coal and oil, which pack enough energy per ton to justify shipping them halfway around the world. As a result, it's hard to imagine biofuels facilities growing quite as large or concentrated as today's world-scale oil refinieries.
But larger scale is also probably the only way that biofuels can succeed in the long run, by gaining sufficient economies of scale to forego the motor fuels tax exemptions that keep boutique biofuels in the running today. Such benefits should always be regarded as an entry mechanism, and never as a sustainable source of profits, despite the experience of the US ethanol business. If biofuels are truly successful in displacing gasoline and diesel, governments will have to close these loopholes or find other ways to compensate for the lost revenues. That's probably still a decade or so away, but well within the operational--and financial--lifetime of any biofuels facility being planned today.
So although some of the current appeal of ethanol and biodiesel derives from the idea that they are produced in small, local facilities operating in harmony with nature, we're going to have to set aside some of this romanticism to gain the full energy and environmental benefits these fuels can offer.