Electrum does not let you use an arbitrary sequence of words as seed. This is because humans are not good at generating really random phrases.
The seed generated by Electrum is a 128-bit random number. It is encoded as a sequence of 12 words, for the purpose of memorization. However, it is important to understand that it has 128-bits of entropy. A phrase generated by a human, or picked from a random book opened at a random page, will in general be much less random, and much more vulnerable to attacks. (and "much more" here means astronomically more).
In this type of attack, time is on the side of the attacker. It is perfectly possible for an attacker to try all the phrases existing in a large database of books, and some variants of those, until they find a wallet. In contrast, it is not possible to do the same with 2^128 random phrases.
As you may have noticed, it is possible to bypass this protection; if you restore your wallet from a hexadecimal string, any string length will be accepted. However, this will only work with hexadecimal inputs. Thus, if you absolutely insist on using an arbitrary phrase as seed, you will need to hex-encode it yourself. Consider this as a protection.
I approve of this message. This is why Armory uses a different alphabet, and uses checksums. Of course checksums are there for checking that data was entered correctly, but it also requires users to manually compute the checksums if they want to enter their own data. It's a nice protection from people just cramming "aaaaaaaaa..." into the wallet recovery screen.
Of course, Armory uses waaaay more than 128 bits of entropy, but I'll be bringing it down to 128 or 160 in the next release -- I was thinking 160 because I wanted to give a little margin in case your system does not have a high-quality entropy pool at creation time. This because I totally agree with ThomasV -- 128 bits is a nice, unbreakable value. Maybe in 1000 years when we have Dyson spheres around a few different stars for the purpose of collecting energy to break
my wallet, they
might break 128 bits.
