There was a new 1.6.3 release last night that was intended to address a few issues:
Release Notes
Check the Joomla 1.6.3 Post-Release FAQs to see if there are important items and helpful hints discovered after the release.
Security
No security issues were fixed in this release.
Issues Fixed
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
Javascript Mootools no longer loaded in backend 25657
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:
We have tested manually updating from Joomla 1.6.2 to 1.6.3 by copying the files from a full package of 1.6.3 on top of 1.6.2 and this worked as expected. No major errors or issues.
Another Option
Another alternative is to use Akeeba Admin Tools to upgrade your Joomla installation from 1.6.2 to 1.6.3. I have just tested this and it works fine.
RECOMMENDATION: Do not upgrade to 1.6.3 at this time. All our templates and extensions are already compatible with 1.6.2. We are hearing reports that a 1.6.4 release could be forthcoming.