The latest version of iPhoto has some issues that can cause data loss if you are running the version freshly installed from the iLife disk.
Apple has released an update that addresses these issues. I guess Apple have put this alert in there to protect people who have just installed iLife and is, essentially, forcing people to update to the version that doesn't have that bug in it.
It is worth pointing out as always before upgrading things such as iLife to make a backup just in case.
Run software update and get the latest version of iPhoto and you should be good to go.