Someone at Apple forgot to turn off a debugging feature that logs user login information to a clear text document. This debugging information was handy for Apple's internal developers as they worked with OS X Lion 10.7.3, but once the update was ready to go golden, all of the debugging features should have been removed.
Now, before you get ahead of the tale, this bug only affects you if used File Vault encryption in Snow Leopard, and then upgraded to Lion while choosing to keep your old File Vault settings intact.
This bug doesn't affect anyone else. If you performed a clean install of Lion, didn't use File Vault in Snow Leopard, or at some point re-installed Lion, you're not affected.
Apple will likely issue an update to Lion soon.
You can find out more about the security bug at: Apple Legacy Filevault Hole.