A bitcoin miner running version 0.8.0 created a large block (at height 225,430) that is incompatible with earlier versions of Bitcoin.
The result was a block chain fork, with miners, merchants and users running the new version of bitcoin accepting, and building on, that block, and miners, merchants and users running older versions of bitcoin rejecting it and creating their own block chain.
What is being done
Large mining pools running version 0.8.0 were asked to switch back to version 0.7, to create a single block chain compatible with all bitcoin software.
Questions & Answers
I'm not a miner or a merchant, what should I do?
Nothing. Your bitcoin software will switch to the correct chain automatically, no matter which version you are running.
Are my bitcoins safe?
What will be done
The core developers have investigated what caused the old versions to reject the new blocks, and have released a 0.8.1 version that avoids creating blocks that are incompatible with older versions. A full post-mortem document has been published.