True, but all appliances that burn fuel produce some CO--some appliances and some fuels produce more than others. Your propane water heater, your natural gas stove, your charcoal barbecue, they all do. A kerosene space heater may not produce much CO, but they are often left on for hours and hours. A slow build up of CO is insidious and will likely be harder to recognize than a sudden build up that quickly makes you nauseous and gives you a headache. Don't get me wrong, I have grown up with kerosene heaters and have fond memories of feeling that radiant heat on my face, but like any fuel-burning appliance, you need to take some precautions.

I just did a quick Google search and found a hazard that I had not thought of--asphyxiation. I've always thought that CO is the biggest danger of kerosene heaters, but apparently so is asphyxiation. In a small or enclosed space, the heater consumes all the oxygen. The lack of oxygen itself can kill you. In addition, less oxygen means inefficient combustion, which leads to increased production of CO, which also can kill you. The combo of CO poisoning plus lack of oxygen is probably especially lethal. But lack of oxygen isn't the only cause of inefficient combustion. Like tmiller116 mentioned, a carbonized or out of adjustment wick could do it. Or if the glass globe (what do call that?) is ajar. These conditions also lead to inefficient combustion and higher than normal CO.

Regarding a kerosene heater and CO, I would say:
* make sure it is in good working condition
* don't use them in an enclosed room
* always make sure there's a source of fresh air (crack an outside window an inch)
* don't fall asleep with one on
* have a CO detector

Of course, there are the additional warnings to keep it away from flammable objects and to always refuel it outside, after it has cooled.