I went out today and noticed lots of white specks on my tomato plants. Close inspection reveals - Freaky Green Caterpillars covered with white bumps! After some research online (Gotta love Google), I found out that these are hornworms. The white stuff on them are Braconid Wasp larvae. Apparently the female wasps inject their eggs into these hornworms. The larvae eats the inside of the caterpillar before coming out and forming these cocoons.
Several sites suggest that these caterpillars are already dying and to leave them alone so that the larvae can become wasps and go on to kill more hornworms. Sounds good to me!
I believe they're the "Tobacco Hornworm" because I only count seven lines on this uncovered one.