According to the e-mail that I had forwarded to me (and whose authenticity I have no reason to question), Harvard would technically have four grades -- Honors, Pass, Low Pass, and Fail. My guess, though, is that Low Pass and Fail would be extremely rare, and 98%+ of all grades would be Honors or Pass, as they are at Yale. The shift then is basically from at least five commonly used grades (A, A-, B+, B, and B-, unless I'm mistaken) to two.

Stanford apparently adopted a similar proposal a few months ago.