This new version is a Security Update that improves security for the contributor User Level. This level of access is usually provided to allow members to comment on posts but not create posts.
The problem that is cured is when a user uses an exploit they are allowed to move from a lower level user to a higher level and post content.
If you recently updated to a 3x version or 3.1.1 even it is important that you apply this patch.
Like always backup your files and database. Never install an auto update if you have made modifications to the default themes or plugins without renaming them because the autoupdate will write over those files.
Many people also suggest that you turn off all of your plugins before performing the update but if you run into problems remember that you can rename your plugin directory to turn off all of your plugins an allow you access to WordPress as administrator.