"Openness – the very characteristic of Android that makes us love it – is a double-edged sword. Redditor lompolo has stumbled upon a perfect example of that fact; he’s noticed that a publisher has taken "… 21 popular free apps from the market, injected root exploits into them and republished." The really scary part? "50k-200k downloads combined in 4 days."Source. I'm really impressed by how quickly Google managed this problem. They found all the apps, yanked them out of the Market & from the affected phones, banned the developer. They notify you via e-mail, if your device has been affected, and fix your phone via an update (no, that is not a full OS update, it's not coming from the phone manufacturers).
Actually as it turns out, you can acess the "update" via the Android Market. Nice.