There was a new 1.6.3 release last night that was intended to address a few issues:
Check the Joomla 1.6.3 Post-Release FAQs to see if there are important items and helpful hints discovered after the release.
No security issues were fixed in this release.
Category Summary Link
Administration Can't insert image for menu item 25650
Components *Redirect not now fully editable 25661
Installation Updates sites never re-enabled after being disabled 25688
Major Problems with 1.6.3 Update Process
However, we are hearing reports that updating to 1.6.3 is causing some issues, some of those are MAJOR issues like it removing all your files. We are investigating locally and when not in FTP mode we just get an upgrade failure due to the large 8mb Joomla 1.6.3 zip file. We are seeing PHP timeouts in non-ftp mode, and allowed memory size exhausted (32mb in php.ini) with FTP mode. We are not able to replicate files being removed as reported here: