Security update makes Java unusable on OS X
This happened to me last year also. I always keep the latest developer's versions of Java installed (from Apple's developer support web site) - so, I did not have a standard configuration. When this happened once before, I spent a while reading about other people's similar problems on the web, trying to fix the problem, etc. to no avail. I eventually just did an OS X re-install.
This morning when applying the latest software update zapped Java, I just went ahead and did an OS X re-install followed by re-applying security patches, etc. About 90 minutes wall clock and about 20 minutes of my time wasted.. eerrrrrr....
PS: (written a day after original post): it is rare that updates zap Java on OS X, but it does happen. People using OS X should install this update - my advice is that if Java does become inoperable, then doing an OS X re-install (use the install option for saving previous user accounts and network settings!) is probably the most straight forward thing to do.