The country has seen a drop in sectarian violence as a result, but some observers are concerned by the trend's other possible consequences.

About 1 million Iraqis were displaced within the country during Saddam Hussein's regime, and another 1.2 million to 1.3 million have been displaced internally since his 2003 ouster. Another estimated 1.4 million Iraqis went to Syria, about 750,000 to Jordan, and thousands more to Iran, Egypt, Lebanon, Turkey and other Persian Gulf states, according to September 2007 statistics from the U.N. High Commissioner for Refugees.

Now, as Iraqis return -- due to the decline in violence or because they ran out of money or face new visa restrictions in other countries -- many cannot move back to their homes because they are destroyed or occupied by other families, or they are choosing to live elsewhere.

Some Iraqis would rather live in areas where they feel safe, and those places are where they are not the ethnic minority, said Elizabeth Ferris, senior fellow of foreign policy at the Brookings Institution.

To illustrate her point, Ferris cited reports from the International Organization for Migration, which tracks internally displaced Iraqis. Basra, a city in southern Iraq, is populated by mainly Shia and is attracting other Shia, and only about 5 percent the displaced there want to return home. However, in Baghdad -- once a mosaic of different ethnic and sectarian groups -- 80 percent of internally displaced Iraqis want to go home.

Even Baghdad is becoming more segregated, with Shia concentrated in the East and Sunnis congregating in the West, she said.

As the groups consolidate, there is a propensity to want to push out members of other sects, said James Phillips, research fellow for Middle Eastern affairs at the Heritage Foundation.

The forced population movements help strengthen the hand of hard-line leaders among all contending groups and weaken the authority of the central government, said Phillips.

"Once those populations move into refugee camps, they become dependent on groups that take care of them, and that's often the militias or anti-government groups," he explained.

And since about one-third of Iraqis are in mixed marriages, "we're getting reports of families who are being split up," Ferris noted.

In addition, the longer Iraqis are displaced, the harder it is for their children to go to school, which will create huge consequences for society down the line, she said.

The United Nations is seeking $265 million this year from donor governments to help displaced Iraqis, and some of that funding is earmarked for supporting educational and health programs in neighboring countries that have taken in Iraqis, according to a U.N. statement.

The funding also is intended to support services within Iraq, such as counseling, providing household items and assisting refugee camps, although delivering aid in much of the country is still difficult because of the continuing security problems, the U.N. High Commissioner for Refugees' office said.

According to Ferris, the Iraqi government should implement systems to help returning Iraqis, such as instituting processes to register and verify property claims, to avoid a major potential for conflict that will only grow over time, she said.

-- By Larisa Epatko, Online NewsHour