This is possible, like how fabbo do their logins. It's a simple change in the index.php however you'd need to change all the errors e.g email not existing. But it's a good idea.
probably as simple as making it check the email field instead of the username... if no one posts anything before i get home & have a look at the codes, i'll see if i can help.
(sorry for bumping, tabs been open for a while, didnt realise the dates)