I had some confusion on this myself and got clarification in #bitcoin-dev:

The bad block was number 74638, the last good one was 74637.  The numbers start at 0, so when your client shows there are 74638 blocks then that means you have up to block number 74637, the last good one.

Updated and combined instructions:

1.  Stop generating immediately, close your current client if you have not updated to 0.3.10.

2.  Download 0.3.10:

http://www.bitcoin.org/download/bitcoin-0.3.10-win32-setup.exe
http://www.bitcoin.org/download/bitcoin-0.3.10-win32.zip
http://www.bitcoin.org/download/bitcoin-0.3.10-linux.tar.gz

SHA1 16645ec5fcdb35bc54bc7195309a1a81105242bb bitcoin-0.3.10-win32-setup.exe
SHA1 4f35ad7711a38fe8c880c6c9beab430824c426d3 bitcoin-0.3.10-win32.zip
SHA1 e3fda1ddb31b0d5c35156cacd80dee6ea6ae6423 bitcoin-0.3.10-linux.tar.gz

3. (optional)  Download a previously known good blockchain:

http://knightmb.dyndns.org/files/bitcoin/blocks/
http://rapidshare.com/files/413168038/BitcoinBlocks.torrent

and replace your blk0001.dat and blkindex.dat files with those from the relevant download for your platform.

3b.  If you don't download, delete or move the blk0001.dat and blkindex.dat files.

4.  Start 0.3.10 and watch it catch up to block 74637 and beyond and help restart things.

Edit:
Edit 2: Add more explanation

4b.  Currently the network has a combination of good and bad nodes (those running versions older than 0.3.10).  If you only connect to nodes running old versions, you will be stuck at 74638 blocks.  You can fix this by running the client with the options "-addnode=75.158.131.108 -addnode=99.27.237.13 -addnode=76.235.234.64 -addnode=74.137.15.169 -addnode=68.68.99.14".  This specifically connects you to a number of 'known good' nodes and ensures that you receive transactions generated within the network of updated clients.  As the number of out of date clients in the network decreases, this will become unnecessary.  If you want more nodes or just different ones, you can find a larger list at http://www.bitcoin.org/wiki/doku.php?do=show&id=74638_nodes .

Ya know, in a way, this actually temporarily decreases the difficulty to generate blocks until everyone upgrades. Yeah, it'll be slower, but that just gives each client more time to try to generate the difficult hash.

I did all steps, now my client is 0.3.10 and it stopped at block 74638. Is all fine?

If you still show 74638 blocks then you aren't connected to any 0.3.10 nodes.  

For today, try adding these parameters: 
-addnode=75.158.131.108 -addnode=99.27.237.13 -addnode=68.68.99.14

See
http://bt.irlbtc.com/view/828

I added the addnode options and info about the 'stuck at 74638 blocks' issue at http://bt.irlbtc.com/view/823.msg9595#msg9595

Of course, this happened right after the difficulty kicked up to 511.7, so all these new "good" blocks will have to contend with that.  And a good chunk of the network grind power is off on the wrong chain, so new blocks may take a lot longer than 10min to find.  At what point will the balancing figure this out and possibly kick the difficulty back down again?

I'm chucking as much CPU at this as I can.  Yeah, bit of an unfair advantage I guess until everyone upgrades.  
My wife's PC already generated 2 of the new blocks (LOL), luck is on her side I guess.

On Windows, findstrc:"version message" debug.log

It looks like the bad chain was on block 74678 recently.  Can't wait to overtake it.

On the stats at http://nullvoid.org/bitcoin/statistix.php  there's been 5 blocks per hour in the last 3 hours.  We had a difficulty adjustment about a day ago that should have put it back to 6 blocks per hour.