Wow, I just learned the hard way what happens when you dont update wordpress. This blog was hacked and injected with about 2mb worth of spam links. The script also went in and changed the file permissions on pretty much everything, adding extra headache in getting things fixed. I found out about this because google sent me an email saying that my blog was removed from the google index, stating exactly why.
Now that I'm running the latest wordpress, I've temporarily lost my custom theme, so I'm rolling with the default for the time being.
UPDATE: I'm now using the "wordpress automatic upgrade " plugin, which makes updating a snap so you can retain your custom theme and plugins. Awesome!