Manufacturing vinyl puts chlorine into the environment. Burning it releases toxins. Plasticizers like phthalates cause respiratory problems.
I would consider aluminum siding. It costs more, but it is ultimately recyclable. That's worth something!
Greenpeace organizes against vinyl. Thanks for asking:
http://www.greenpeace.org/usa/en/campaigns/toxics/go-pvc-free/Go PVC-Free
Polyvinyl chloride (PVC) plastic, commonly known as "vinyl," has become one of the most widely-used types of plastics. It's used in packaging, home furnishings, children’s toys, automobile parts, building materials, hospital supplies, and hundreds of other products. PVC may be versatile and relatively inexpensive, but the price we pay for a low-cost piece of PVC pipe or soft vinyl toy is far steeper than it may seem.
In fact, this commonplace plastic is one of the most toxic substances saturating our planet and its inhabitants. PVC contaminates humans and the environment throughout its lifecycle: during its production, use, and disposal. Few consumers realize that PVC is the single most environmentally damaging of all plastics. Since safer alternatives are available for virtually all uses of PVC, it is possible to protect human health and the environment by replacing and eventually phasing out this poison plastic.
The good news is that this industrial transition can be accomplished in a manner that is fair to all involved - the plastic manufacturers, industrial workers, and host communities. PVC can be replaced with safer materials in virtually all cases. Substitutes for PVC include traditional materials such as clay, glass, ceramics and linoleum. In those cases where traditional materials cannot be used as a replacement, even chlorine-free plastics are preferable to PVC. As consumers increasingly demand PVC-free products, and as the environmental and health costs of PVC are recognized, practical alternatives will become more economically viable.