According to the Second Life Blog:
"On September 6 we discovered evidence that an intruder was able to access the Second Life database through the web servers. The exploit was shut down on the afternoon of September 6 when we discovered it.
Detailed investigation over the last two days confirmed that some of the unencrypted customer information stored in the database was compromised, potentially including Second Life account names, real life names and contact information, along with encrypted account passwords.
No credit card information is stored on the database in question, and that information has not been compromised.
As a precaution we have invalidated all Second Life account passwords. In order to log-in to Second Life you will have to create a new password. Please access the log-in page at https://secondlife.com/password, and click on the "Forgot Password" link. An email will be sent to the email address you have registered with us. (Don't forget to check your spam filter!) Please click through the link in that email, answer the security question, and create a new password."