On September 12th, 2006, Pope Benedict gave a speech at the University of Regensburg, where he had taught for many years. His talk was on the relationship between belief in God and mankind's ability to think. In a lengthy talk, Pope Benedict turned to an example of a faith that approaches this question differently than Catholicism, namely Islam. Islam teaches that God can do this or that if He so chooses, and that He's never bound by any laws, and God can even contradict Himself. Catholicism does not teach that. In the talk Pope Benedict mentioned a quote from Emperor Manuel II from 1391 - "Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached."
Riots erupted throughout the Muslim world, only furthering the Pope's point, which was actually situated within a much larger context critiquing many aspects of religion through the centuries.
Sadly, the comment was fairly insignificant to his overall point, and I've heard that the Holy Father still regrets to this day having used it, especially given how little it had to do with his talk. What was also lossed in the rioting - the talk was another theological "bomb" from Benedict; it was a talk that people will be studying in the seminary a hundred from now.
One of the great points that Pope Benedict drove home is captured in the following quote about the problem with the Muslim understanding of God. For Muslims "God's transcendence and otherness are so exalted that our reason, our sense of the true and good, are no longer an authentic mirror of God, whose deepest possibilities remain eternally unattainable and hidden behind his actual decisions" (26). As Catholics we believe that the ability to think has given us the ability to KNOW God, and to glimpse His purpose and His plan. At times God's ways will confound us, but we are not left floundering with no idea of who God is or how He works, Catholics believe (very importantly) that I can understand and know things about God that are eternal truths.