The French legislature recently passed a bill outlawing the wearing of burkas in public places, and all that remains is president Sarkozy's signature to pass this into law. I'm no expert on French law, but I am willing to bet that the French constitution contains similar freedoms to the American constitution, including freedom of religion. Of course the wearing of a burka is not necessarily part of the religious practices of Islam, but is seen by some, according to the Qur'an, to be a necessary part outside for it's practitioners, and I believe that constitutes as enough of a reason to protect it under the veil, so to speak, of religious freedoms.
A clear counter-argument would be that burkas are incredibly sexist, and, while that may be based in truth, this is part of the foundation of the religion. However, the biggest issue here is the message it sends to Islamic extremists. It only shows them the opposition they have in the western world and it strengthens their beliefs that the west is intolerant of their religion.
While France is the first country to outlaw full-face burkas, many other European countries are considering a ban as well, and with that, "Islamophobia" will seem, especially to practitioners and even more to extremists, to be in full swing.