A number of users are starting to upgrade to Java 7, as it's the highest version offered by Oracle, and higher numbers always mean better, right? Unfortunately, not in this case.
As of this writing, the official recommendation from the developers of KoLMafia is to use Java 6. Users who wish to use Java 7 should do so at their own risk, with the full understanding that Mafia is not developed under Java 7. Think of it as running an "experimental" branch of code - if you are not a technically savvy enough person to be doing that, you should be using the far less buggy Java 6. In fact, I consider myself fairly technically savvy, and I use Java 6. 7 is just not ready for widespread use right now. And if you're worried about losing any cool features by downgrading - I can promise that you won't.
The most important point to take home: before reporting bugs in this forum, confirm that the bug exists under Java 5 or 6.* If it doesn't, well, it's a Java bug!
*in rare cases, java 7 may uncover buggy behavior that was escaping notice under java 6; but again, you need to be a sufficiently technically savvy person to know when this applies.