For some players relatively new to minecraft, minecraft updates may seem like a confusing time. You may ask yourself why none of your usual servers are not working or why they are too lazy to update to the latest and greatest version. Well, kids, it's time we had that talk.
Mojang, the company that develops minecraft, releases updates to the game every few months. These updates involve changing and adding code in order to create the changes we experience as the end user. However, minecraft is split into two separate games: singleplayer and multiplayer. The singleplayer client is what is currently installed onto your computer, its the icon you double click on, the window that pops up, and where you install mods to. The multiplayer client is what is currently installed onto all minecraft servers. It's what makes a server, the server, it allows for multiple clients to share packets of information about things like chat, block changes, etc. The multiplayer server client allows people to "talk" to each other so they can share their in-game experiences.
Okay, so if mojang updates both singleplayer and multiplayer, then whats the big deal? Just update the multiplayer client! Well, eventually(with the mod api) this might be possible. However, at the moment, multiplayer minecraft sucks, if you've ever played on a completely vanilla server, you would know what I'm talking about. Everyone needs "op" status in order to do certain things, there is no ability to warp to places, protect land, have a virtual economy, have cool chat tags, nothing. As a result the Bukkit team created a multiplayer server client mod that changes the minecraft code in order to allow plugins that add these features.
Bukkit changes mojang's code to allow plugins to do their thing(anti-griefing, logging, chat colors, etc). So whenever Mojang adds things to minecraft, they also change the code. Since Mojang's original code is untouched, it is similar to "plain vanilla" in that there is no sprinkles or fudge added. Bukkit, lets plugins add sprinkles and fudge to the game to enhance those features, however since bukkit is(was, but its complicated) independent of mojang, they have to wait for mojang to release new update code in order for them to modify it to a plugin friendly state. The mod api(coming in 1.5) will combine bukkit and mojangs efforts to make the "vanilla" multiplayer client already plugin friendly, but until then, we must wait.
Long story short: server will have to stay on 1.3.2 until bukkit updates to 1.4 in a few days/weeks
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