Do you remember the stories from a little while ago about Caster Semenya, the South African runner? She won the 800 meter world championship in 2009, and then the IAAF ordered drug and gender testing. It was the 'gender testing' bit that was a little iffy - the results were, shall we say, ambiguous. To my understanding, she was born with female genitalia, raised female - wasn't trying to cheat - but had several internal markers - hormone levels, dna, etc - that would have in other cases marked her as male.
With that lengthy explanation out of the way, here's an article from ESPN.com - an interview between ESPN's Julie Foudy and Alice Dreger, a professor of clinical medical humanities and bioethics at Northwestern University. Especially relevant quote:
Dreger: If there had been a simple answer to this, this would have been solved 50 years ago, and instead it's only getting more difficult to figure out how to answer this problem that nature presents to us. Nature is a slob. Humans like their categories neat. They like their categories of sex neat.
They like their categories of age neat, so for example, we say to people, 'At the age of 18 you may vote but at the age of 17 and 360 days you may not vote.' We say, 'You may drink at the age of 21 but not at the age of 20.' Why? Because humans like to create terribly neat categories out of nature because it allows us a nice, tight social organization. The truth is, nature doesn't care that we like nice, neat social organizations. Nature likes variety.