This came up on a recent (mostly excellent) episode of Ask an Atheist, which featured an (entirely excellent) interview with Skepchick Heina Dadabhoy on the subject of (among other things) how Muslims are treated in the West. (Listen to it. It's seriously good. TL;DL: They aren't terrorists, and they actually are an oppressed minority.)
This is something that we get wrong all the time, and I wanted to address it really quickly. A "fatwa" isn't some sort of religious "bounty" on a person's head, the way that it is often described in the popular media by those who are too scared of people with different religious beliefs (or different skin-tones) to bother getting things right.
In Islam, a "fatwa" can be a legal ruling in sharia or simply a religious decree (similar to a "Papal bull" in Catholicism; of course Islam is decentralized, leading to various religious leaders sometimes issuing contradictory fatwas). Saying that "fatwa" means a decree for religious violence is like saying that "referendum" means voting on whether your province is going to secede from Canada; in certain rare circumstances that may be the case, but it is far from the norm.
That said, probably the most famous fatwa, that issued against Salman Rushdie by Ayatollah Khomeini, did indeed effectively put a price on Rushdie's head, which is almost certainly what led to the widespread misunderstanding of the word today.
While some fatwas do decree death, they are in the vast minority.