It's only a vulnerabilty at this time, but security experts have information that several hacker groups are working hard to make use of this vulnerability (I'll see if I can find the article). They say that it's just a matter of time before Jpegs are used to hack your computer or to spread viruses.
this is wrong, their are exploits in the wild for this now. easynews discovered it on the 28th, http://easynews.com/virus.html

computers are scary if you dont understand what you are doing. make sure you are patched and use good security practices.

my suggestions (full time system administrator for 250+ users & part time consultant for a bunch of small businesses).
DO NOT USE INTERNET EXPLORER! Firefox is a much superior browser, http://www.mozilla.org/products/firefox/
DO NOT USE OUTLOOK (or EXPRESS) FOR EMAIL! Thunderbird is a much better solution http://www.mozilla.org/products/thunderbird/
If you must use MS Office make sure it is fully patched. If you can I _highly_ suggest using OpenOffice http://www.openoffice.org/ Has about 95% of the functionality of Office and it is FREE.
DO NOT WORK AS ADMINISTRATOR!! That will help a ton with spyware and other crap.
Use a good firewall.
Use Anti-Virus if you didn't already do all this stuff on the list.