If you are running WordPress version 2.1.1 then you must upgrade immediately to Version 2.1.2.

This is because a hacker had managed to gain access to an official WordPress server and altered the download files of 2.1.1 to include some malicious code that could allow them to execute code within your blog installation, possibly taking control over it, steal passwords etc. The full story, and link to the clean version is at Wordpress.org.

If you are on 2.1, you are safe from the exploit, and may upgrade to 2.1.2 when you wish. If you are on any of the 2.0.x versions you are again safe from the exploit, but should really be running 2.0.9 as that includes other security fixes. You of course can also upgrade straight to 2.1.2 if you desire.

This is why I always leave any upgrades for at least a week, to see what falls out of the bug tree.