The feature is being discussed in this topic on Area51.

EDIT: New RFC topic for 3.2 because 3.1 has been feature locked.

The idea is that users will be allowed to "delete" their account via the UCP, if enabled by the administrators.
Accounts are either "soft deleted" or "hard deleted". The current ability in phpBB is to hard delete, which removes all account settings and (optionally) all of the user's posts. With soft deletion, settings can be kept in case the account must be re-enabled later.
Depending on the settings, the user's posts will show up as being posted by anonymous to normal users, or as the user (with a strike through the name to show that s/he's deleted) to moderators of that forum.
Administrators will have the option of either keeping or deleting the user's posts, as is the current ability.
Also, admins can choose to either have to approve all deletions or deletions will be on a timer (where they can set how long after the user clicks delete before the account becomes soft or hard deleted), or both can be the case; X hours after the admin approves, the account will be dealt with.

Any more ideas, comments, suggestions, or otherwise can be posted in the above linked topic. Try and keep this ticket uncluttered for ticket-specific things.