No Western sources are picking it up. It's only being reported by Itar-Tass out of Russia. So I pass it on to you for what it's worth, which probably isn't much. "Abu Musab al-Zarqawi reportedly arrested in Iraq," from [1] Itar-Tass:

DUBAI, January 4 (Itar-Tass) - Abu Mus'ab al-Zarqawi, whom the US occupation authorities declared to be the "target number one" in Iraq, has been arrested in the city of Baakuba, the Emirate newspaper al-Bayane reported on Tuesday referring to Kurdish sources. Al-Zarqawi, leader of the terrorist group Al-Tawhid Wa'al-Jihad, was recently appointed the director of the Al-Qaeda organisation in Iraq.

The newspaper's correspondent in Baghdad points out that a report on the seizure of the terrorist, on whom the US put a bounty of 10 million dollars, was also reported by Iraqi Kurdistan radio, which at one time had been the first to announce the arrest of Saddam Hussein.