Apple released Java 5 for OS X today. (Also known confusingly as both “Java 2 SE 5.0 Release 1” by Apple and as Java 1.5 to Java developers who are used to the 1.x versioning scheme.) It only runs on OS X 10.4 Tiger, so that’s a good enough reason by itself for Java developers on Mac to get Tiger. Of course, there’s tons of other reasons like Spotlight, Automator, Dashboard, etc.
Eclipse runs fine on it, with the exception of starting it from Spotlight. But just start it from Finder, command line, or the Dock and you’ll be fine.