As adaptive optics (AO) matures, it becomes possible to envision AO systems oriented towards specific important scientific goals rather than general-purpose systems. One such goal for the next decade is the direct imaging detection of extrasolar planets. An "extreme" adaptive optics (ExAO) system optimized for extrasolar planet detection will have very high actuator counts and rapid update rates - designed for observations of bright stars - and will require exquisite internal calibration at the nanometer level. In addition to extrasolar planet detection, such a system will be capable of characterizing dust disks around young or mature stars, outflows from evolved stars, and high Strehl ratio imaging even at visible wavelengths. The NSF Center for Adaptive Optics has carried out a detailed conceptual design study for such an instrument, dubbed the eXtreme Adaptive Optics Planet Imager or XAOPI. XAOPI is a 4096-actuator AO system, notionally for the Keck telescope, capable of achieving contrast ratios >107 at angular separations of 0.2-1". ExAO system performance analysis is quite different than conventional AO systems - the spatial and temporal frequency content of wavefront error sources is as critical as their magnitude. We present here an overview of the XAOPI project, and an error budget highlighting the key areas determining achievable contrast. The most challenging requirement is for residual static errors to be less than 2 nm over the controlled range of spatial frequencies. If this can be achieved, direct imaging of extrasolar planets will be feasible within this decade.