In Microsoft Dynamics CRM 3.0, creating custom reports from within CRM was not possible.  The only option for exporting data into an Excel Pivot Chart.

In Microsoft Dynamics CRM 4.0 there is a new Report Wizard, making it simple for users to create reports on demand.  Reports can now also be assigned, with data visibility still defined in the user security roles (for example, two users running the same report may see different data depending on their assigned security roles).   Reports can now also be saved as templates, from which new reports can be built.  Users can choose the data to be reported, the layout of the report including tables and drill through charts, customize and calculate columns, and can even report on one related entity. 

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Another exciting feature is that when report data is exported, there is now the option to allow the re-import of the data.  This means you can export data to Excel, and then re-import after making changes and updates.  The ease of reporting in the new version of Microsoft Dynamics CRM is definitely an added bonus to an already great system!

In addition to creating reports from within the CRM, more complex reports can be created by a developer in Visual Stuidio and published to CRM.