Apparently Apple shipped OS X without updating to the most recent version of Java. Welcome to the joys of living in a walled garden.
As a Java fan, I'm pretty disappointed that Apple is not more supportive of Java. I've long believed that OS X is a nearly ideal development environment for Java with is *nix base and polished UI. PowerBooks have been taking over the Java developer market for a while, although this latest turn of events certainly won't accelerate that process.
However, as much as I think this is just stupid on Apple's part, I can't say that they seem to be hurting because of it. Apple is just lucky that the main threat is Windows, which most people left for OS X anyway. I don't think Vista will be winning them back, even if they are stuck on JDK 1.5