The U.S. Department of Health and Human Services concluded that naphthalene is reasonably anticipated to be a human carcinogen. The International Agency for Research on Cancer (IARC) concluded that naphthalene is possibly carcinogenic to humans, because there is enough evidence that naphthalene causes cancer in animals, but not enough evidence about such an effect in humans. Under the EPA 1986 cancer guidelines, naphthalene was assigned to Group C - possible human carcinogen.

http://www.atsdr.cdc.gov/toxprofiles/phs67.html#bookmark05

And Kelloggs lines their packaging with it.