This is what we know so far about the vulnerability: there is an exploit in the wild, it works on the latest FireFox, and Chrome, and it targets Java 1.7 update 6, there is currently no patch available, the exploit has been integrated into the metasploit framework.
What this means: the potential hit rate for drive-by attacks is currently elevated. Since this is a java vulnerability, this may also affect more than just Windows platforms (multi-platform attacks currently unconfirmed, based on the multi-platform compatibility of java itself.) Update: Metasploit claims to work on Mac OS X via Safari. So consider it just a java issue and ignore the OS and the browser when considering if you're exposed.
The next patch cycle from Oracle isn't scheduled for another two months (October.)
What you can do: this places normal end-users in a pretty bad position, relying mostly upon disabling, or restricting java and hoping that AVcatches the payload that gets installed. None of these are really good options. There is a 3rd-party developed patch that is said to exist, but it's not intended for end-users. My current recommendations are to disable java if you can (see Brian Kreb's handy guide here: http://krebsonsecurity.com/how-to-unplug-java-from-the-browser/ ,) or use something like no-script to help control where you accept and execute java from. Update: Downgrading to 1.6 might be an option for you as well, make sure you're using the latest update. Credit or blame Steven depending on how that works out for you. (JK Steven.)
Suggested reading on the topic:
Thanks to Kevin, and Ed for directing us to this.
(c) SANS Internet Storm Center. http://isc.sans.edu Creative Commons Attribution-Noncommercial 3.0 United States License.