From their website:

3.0.4 Important Security Update
Posted December 29, 2010 by Matt Mullenweg. Filed under Releases,Security.

Version 3.0.4 of WordPress, available immediately through the update page in your dashboard or for download here, is a very important update to apply to your sites as soon as possible because it fixes a core security bug in our HTML sanitation library, called KSES. I would rate this release as “critical.”

I realize an update during the holidays is no fun, but this one is worth putting down the eggnog for. In the spirit of the holidays, consider helping your friends as well.
so get your WP blogs updated asap! I have started and will report back once completed.