Steve Horne wrote a thought provoking post about being locked out of Second Life due to the Grey Goo attack.

Slashdot's post explained pretty clearly what happened as follows:

"Spinning gold rings began to appear in the air and on the ground, and as users interacted with them they began to chase and replicate. Apparently, most people are willing to touch an object they've never seen before and this invoked a worm script that was designed to multiply and spread across the 2,700+ servers run by Linden Labs in California, the game's owner. Many of the six hundred thousand active users experienced serious lag and lost connectivity to the servers, making it one of the largest known denial-of-service attacks in an online game. Linden Labs had to invoke martial law and lock out all logins by users except their staff as they began the task of cleaning the servers of what they began to term 'the grey goo.'""

Paul Trotter's post provides much more information particularly for those who'd like to know more about Second Life.

Second Life for the uninitiated is an entire virtual World that has an amazing wealth of experiences on offer. You can even make real money by creating objects and providing services in the game as there is an exchange between the game's virtual currency and regular currency.

The scope for security exploits along the lines of the Grey Goo attack in virtual environments is the subject of discussion.  Second Life boasts a wide range of security features including the attempted detection of phishing type scams. Their official blog even has a category for Security - so I'm happy - it makes interesting reading.