References are old-school; no one uses them anymore. Don't listen to people who tell you that references don't matter in the "new economy." The vast majority of employers do check references, and they matter.
Employers will only call the references on the list you gave them. Employers can call anyone you've worked for or who might know you, and good reference-checkers won't limit themselves to the formal list of references you provide. They'll call former managers, listed or not—and sometimes, especially those not listed, since they know the omission may have been intentional and thus notable. After all, the list you hand over is, of course, the people likely to present you in the most flattering light, and they want to see you in brighter lighting. The only thing typically considered off-limits in reference-checking is calling your current employer--all else is all fair game.
Past employers can't say anything bad about you. At least once a month, I hear someone say it's illegal for employers to provide a detailed reference, or any information beyond confirming job title and dates of employment. Not true. It's legal for an employer to give a detailed reference, including negative information, as long as it's factually accurate. (That said, some companies do have policies that they won't give references, but these policies are easily gotten around. I've never had a problem obtaining a reference for a candidate, and I've checked a ton of them.)
You'll never be able to get a new job with a bad reference out there. If you're worried about a potential bad reference, do damage control! Call your old boss and ask if she'd be willing to reach an agreement with you on what she'll say to future reference calls. When you call, say something like this: "I'm concerned that the reference you're providing for me is preventing me from getting work. Could we work something out so that this isn't standing in my way?" Also, it won't hurt to soften her up a little first by telling her that you've learned from the situation, appreciate the chance she gave you, and so forth.
Alison Green is the author of Managing to Change the World: The Nonprofit Leader's Guide to Getting Results. She is chief of staff for the Marijuana Policy Project, a nonprofit lobbying organization, where she oversees day-to-day management of the staff as well as hiring, firing, and staff development. Her writings have been published in the Washington Post, the New York Times, Maxim, and dozens of other newspapers. She blogs at Ask a Manager.