Let's take a moment to note, before frantically shutting down all the garbage mashers on the detention level, that this is an unreleased exploit and there is no expectation of it going wild; it's in the care and feeding of the Zero Day Initiative now and notification to Apple, Sun (Java) and other affected parties will be handled professionally. The only real-world risk is if some clever soul manages to find the same unpublished vulnerability that Dai Zovi did and pairs it with a malicious payload. Personally, I use Java for a couple of work purposes, but I can presumably leave it on in one browser for those specific pages and do my general browsing with another, Java-disabled browser... that is, I would, if I was paranoid.
There are plenty of other ways to improve your Mac security, most listed via this post. Top three: turn on the firewall, run as a normal user, and turn off wireless (at least, turn off automatic connection to open networks). Apple's guide to Tiger security is also available as a PDF here.