As GigaOm points out, many data centers are flooded and are running backup generators for power. There has also been some damage to transatlantic cables.
This is reminiscent of the Internet damage caused by Hurricane Katrina in New Orleans. Only one New Orleans Internet service provider, DirectNIC, remained online during and after the hurricane. Shortly after the hurricane, Doc Searles conducted a 40-minute interview of DirectNIC CEO Sigmund Solares. Solares tells a fascinating story of the effort it took to find deisel fuel for their standby generators and keep the data center running. If you are a data center geek -- even a little bit -- you will enjoy the interview.
It also reminds me of one of the initial motivations for the invention of packet switched networks -- that they would be able to route around damaged equipment and continue to function in case of a disaster. The figure below is from one of Paul Baran's 1964 RAND reports outlining the rationale and design for a distributed packet switching network.
The problem here is that too much equipment was located in a small area. You can understand why -- there are many large businesses in lower Manhattan and a lot of cable landing points near New York City.
I've added a second post on the damage caused by the hurricane. It talks about ways the Internet senses and reports its own state.