This notice just came out on Steven Chan's blog. If you're not following it, you definitely should.
The issue at hand is not that Auto-Update in itself causes problems. The real issue is that Oracle is going to push (through Auto-Update) the JRE 1.7 update. The JRE 1.7 update is NOT certified with E-Business Suite (any versions) at this time.
So, in order to keep your user's desktops on JRE 1.6, you MUST turn this auto-update feature off!
The update for JRE 1.7 could be pushed as early as July 3, 2012. The update WILL definitely be pushed after September 7, 2012 (after the release of JRE 1.6.0_35).
Steven Chan's blog has more information (including instructions on what you can do to undo the JRE 1.7 update if you get hit by it). The full link to the posting on Steven Chan's blog can be found here: