Minecraft will likely be releasing 1.2 tomorrow (March 1, 2012). If you still want to play on the server until it is updated you must click "Not Now" when minecraft prompts you to update. If you do not click "Not Now" you will update your minecraft client and will be unable to connect to the server until we can update. Updating servers takes more time than it does to update a client because we have to wait for CraftBukkit and all of the plugins to update. Most have been preparing for the release of 1.2 and it should only be a few days at the most before we can update.
If you really want to try 1.2 and see what new features it has, just make a copy of your minecraft.jar file and save it somewhere before you update. Then if you ever want to go back to 1.1 you can just drag and drop the 1.1 minecraft.jar into your .minecraft folder.
How to go from 1.1 to 1.2 and 1.2 to 1.1 on Windows:
Click the Windows button on your desktop
Enter %APPDATA% into the windows search box yes include the % symbols
Open your .minecraft folder
Open the bin folder
Create a folder somewhere you can find again
Right click the minecraft.jar file and select copy
Go to your newly created folder
Right click anywhere in the new folder and select paste
Now you may upgrade your minecraft client
To go back to 1.1 just replace the minecraft.jar with the one you saved in the folder you created