From The Word of Notch:
"The client version is now 1.2.4
The server version is now 0.2.6 (mandatory update, there’s been protocol changes)
Bug fix list:
* Swords and other weapons now deal damage properly
* Added proper hurt animations and sounds to mobs and players
* Fixed dead players logging in as invisible ghosts
* Made arrows visible and deal damage
* Hoes now produce proper seeds
* Creepers make noises and animate before exploding
* Explosions animate properly
* No more infinite free arrows
* Server logging now appends to server.log rather than overwriting it
* Buttons and levers (and a few other blocks probably, it’s a general solution) animate properly
* Fixed minecarts (and pigs!) moving twice as fast as they should when ridden.
* The join server screen now remembers the last entered ip
* Increased chunk saving frequency on the server
* Leaving sneak mode no longer triggers a million sounds
* You can now see sneaking players
* Names of sneaking players aren’t visible through walls, and are visible a much shorter distance
I’ll monitor for bugs for a while, then head home!
Server 0.2.6_01 no longer gives everyone 64 snowballs on connecting
Server 0.2.6_02 and client 1.2.4_01 now spawn other monsters than ONLY CREEPERS EVERYWHERE"