It generally requires an upgrade to the fuel system, yes. There's been a lot of discussion of this in the tuner community, but the very short version is that it works and works well if making power is your goal.
tl;dr - E85 does have lower energy per unit of volume than pump gas, but the significantly higher octane rating and evaporative cooling effect of ethanol mean higher boost and compression levels, more than making up for the difference.
There's a good primer here: http://www.iwsti.com/forums/3016597-post3.html
tl;dr - E85 does have lower energy per unit of volume than pump gas, but the significantly higher octane rating and evaporative cooling effect of ethanol mean higher boost and compression levels, more than making up for the difference.